XYZ company makes 2 products and is now considering adopting an ABC approach to allocating their $500,000 of overhead between 2 activities: assembly, with a total cost of $300,000, and quality control, with a total cost of $200,000.  Assembly uses machine hours as its cost driver, quality control uses inspection hours as its cost driver.  Product A uses 15,000 machine hours and 10,000 inspection hours.  Product B uses 5,000 machine hours and 15,000 inspection hours.  Using ABC, what amount of overhead should be allocated to Product B?

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Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.