Question: ABC Company uses an ABC overhead costing system. It calculated the following predetermined overhead rates at the end of the year. It calculated the application

ABC Company uses an ABC overhead costing system. It calculated the following predetermined overhead rates at the end of the year. It calculated the application rates for the following three overhead pools:

Cost Pools Predetermined Application Rate

Machine Cost Pool $2.50 Per Machine Hour

Inspection Cost Pool $40.00 Per Inspection Hour

Engineers Cost Pool $50.00 Per Engineering Hour

Next to the application rate is the activity that drives the cost in each pool.

In January, Product A consumed the following activity:

Actual Results in January Product A

Machine Hours 5,000

Inspection Hours 100

Engineers Hours 50

Calculate the amount of machine overhead cost that will be applied to Product A in January.

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