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Jefferson, Inc. produces two different products (Product 5 and Product Z) using two different activities: Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of Machining is $185,600, while the cost of Inspection is $33,500. The activity drivers are used as follows: Product 5Product ZTotal Machine hours1,8563,9445,800 Number of batches452267 What proportion of Machining activity is used by Product Z?

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Answer:

Proportion product Z (Machining)= 68%

Explanation:

Giving the following information:

Machining uses machine hours as an activity driver.

The cost of Machining is $185,600

Machine hours:

Product 5= 1,856

Product Z= 3,944

Total Machine hours=  5,800

To calculate the proportion of Machining for product Z, we need to divide the machine-hours used by the total machine-hours

Proportion product Z= 3,944/5,800= 0.68= 68%

If you have to allocate the machining costs to Product Z:

Machining costs= 0.68*185,600= $126,208

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