Determine the error in the prediction of X1 batch-level costs resulting from the use of only machine hours. Indicate whether the use of only machine hours results in overpredicting or underpredicting the batch-level costs of product X1
Multiple Cost Drivers
Scottsdale Ltd. manufactures a variety of high-volume and low-volume products to customer demand. Presented is information on 2013 manufacturing overhead and activity cost drivers.
| Unit |
$ 500,000 |
|
10,000 machine hours |
| Batch |
100,000 |
|
500 customer orders |
| Product |
200,000 |
|
25 products |
Product X1 required 2,000 machine hours to fill 10 customer orders for a total of 8,000 units