Consider the information given on two products and their usage of two overhead activities (set-ups and inspection):

Suppose that machine hours are used to assign all overhead costs to the two products. Which of the following is the best answer?
a. Deluxe mowers are undercosted, and regular mowers are overcosted.
b. Deluxe mowers and regular mowers are accurately costed.
c. Deluxe mowers are overcosted, and regular mowers are undercosted.
d. Using inspection hours to assign overhead costs is the best allocation approach.

Economy Mowers Units produced Setup hours Inspection hours Machine hours Deluxe Mowers 10,000 1,000 500 300 40,000 500 500 1,500