Zimmerman company manufactures two products, board 12 and case 165. zimmerman’s overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. information on the two products is: board 12 - case 165direct labor hours - 15,000 - 25,000machine setups - 600 - 400machine hours - 24,000 - 26,000inspections - 800 - 700overhead applied to case 165 using activity-based costing is? a. $3,840,000b. $4,608,000c. $4,992,000d. $6,000,000

Option (b) is correct.

Explanation:

Setting up machine cost applied to product case 165:

= (Total setting up machine cost ÷ Total machine setups) × Number of machine setups of case 165

= [$2,400,000 ÷ (600 + 400)] × 400

= $2,400 × 400

= $960,000

Machining cost applied to product case 165:

= (Total machining cost ÷ Total machine hours) × Number of machine hours of case 165

= [$5,400,000 ÷ (24,000 + 26,000)] × 26,000

= $108 per machine hour × 26,000

= $2,808,000

Inspecting cost applied to product case 165:

= (Total Inspecting cost ÷ Total Inspections) × Number of Inspections of case 165

= [$1,800,000 ÷ (800 + 700)] × 700

= $1,200 per inspection × 700

= $840,000

Therefore,

Overhead applied to Case 165:

= Setting up machine cost + Machining cost + Inspecting cost

= $960,000 + $2,808,000 + $840,000

= $4,608,000

the correct answer is - no.

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