Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products M68B and H27T.
Activity Cost Pool Activity Measure Total Cost Total Activity
Machining Machine-hours $299,000 13,000 MHs
Machine setups Number of setups $240,000 400 setups
Product design Number of products $80,000 2 products
Order size Direct labor-hours $290,000 10,000 DLHs
Activity Measure Product Product
Machine-hours M68B H27T
Number of setups 6,000 7,000
Number of products 250 150
Direct labor-hours 4,000 6,000
Using the ABC system, how much total manufacturing overhead cost would be assigned to Product H27T?
a. $291,000
b. $174,000
c. S465,000
d. $454,500
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