Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Zips Dees Direct materials per unit Direct labor per unit $148 $120 $54 $49 Direct labor hours per unit 2.5 1 Annual production 23,500 39,000 Information about the company's estimated manufacturing overhead for the year follows: Estimated Activities Activity measures Direct labor hours overhead cost $3,214,250 $199,000 Supervision and maintenance Number of batches Batch costs O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97 Direct labor hours $3,214,250 Supervision and maintenance Batch costs $199,000 Number of batches Number of engineering hours $194,950 Engineering changes $3,608,200 Total estimated manufacturing overhead for the year Total estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed for the activity based costing system follows Zips 58,750 Dees Total Direct labor hours 39,000 97,750 Batches 2,350 300 2,650 Engineering hours 2,050 1,100 3,150 The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity based costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.) O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97
Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Zips Dees Direct materials per unit Direct labor per unit $148 $120 $54 $49 Direct labor hours per unit 2.5 1 Annual production 23,500 39,000 Information about the company's estimated manufacturing overhead for the year follows: Estimated Activities Activity measures Direct labor hours overhead cost $3,214,250 $199,000 Supervision and maintenance Number of batches Batch costs O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97 Direct labor hours $3,214,250 Supervision and maintenance Batch costs $199,000 Number of batches Number of engineering hours $194,950 Engineering changes $3,608,200 Total estimated manufacturing overhead for the year Total estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed for the activity based costing system follows Zips 58,750 Dees Total Direct labor hours 39,000 97,750 Batches 2,350 300 2,650 Engineering hours 2,050 1,100 3,150 The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity based costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.) O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the
company's two products:
Zips
Dees
Direct materials per unit
Direct labor per unit
$148
$120
$54
$49
Direct labor hours per unit
2.5
1
Annual production
23,500
39,000
Information about the company's estimated manufacturing overhead for the year follows:
Estimated
Activities
Activity measures
Direct labor hours
overhead cost
$3,214,250
$199,000
Supervision and maintenance
Number of batches
Batch costs
O A. $92.52
O B. $58.43
O C. $35.21
D. $21.97
Transcribed Image Text:Direct labor hours
$3,214,250
Supervision and maintenance
Batch costs
$199,000
Number of batches
Number of engineering hours
$194,950
Engineering changes
$3,608,200
Total estimated manufacturing overhead for the year
Total estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed for
the activity based costing system follows
Zips
58,750
Dees
Total
Direct labor hours
39,000
97,750
Batches
2,350
300
2,650
Engineering hours
2,050
1,100
3,150
The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity
based costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.)
O A. $92.52
O B. $58.43
O C. $35.21
D. $21.97
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