Orear Corporation manufactures two products: Product Z34D and Product J25M. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Z34D and J25M.   Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 120,000 6,000 Machine-hours Machine setups Number of setups $ 90,000 150 setups Product design Number of products $ 84,000 2 products Order size Direct labor-hours $ 300,000 10,000 Direct labor-hours Activity Measure Product Z34D Product J25M   Machine-hours 4,000 2,000   Number of setups 90 60   Number of products 1 1   Direct labor-hours 7,000 3,000   Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product J25M is closest to: Group of answer choices 50.00% 30.00% 15.15% 19.87%

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Orear Corporation manufactures two products: Product Z34D and Product J25M. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Z34D and J25M.

 

Activity Cost Pool

Activity Measure

Total Cost

Total Activity

Machining

Machine-hours

$ 120,000

6,000 Machine-hours

Machine setups

Number of setups

$ 90,000

150 setups

Product design

Number of products

$ 84,000

2 products

Order size

Direct labor-hours

$ 300,000

10,000 Direct labor-hours

Activity Measure

Product Z34D

Product J25M

 

Machine-hours

4,000

2,000

 

Number of setups

90

60

 

Number of products

1

1

 

Direct labor-hours

7,000

3,000

 

Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product J25M is closest to:



Group of answer choices
50.00%
30.00%
15.15%
19.87%
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