The amount manufacturing overhead that would be allocated to one unit of Dees using an activity - based costing system would be closest (Do not round intermediate calculations and round the final answer to the nearest cent.) O A. $32.20 O B. $70.41 OC. $103.26 OD $59 35
The amount manufacturing overhead that would be allocated to one unit of Dees using an activity - based costing system would be closest (Do not round intermediate calculations and round the final answer to the nearest cent.) O A. $32.20 O B. $70.41 OC. $103.26 OD $59 35
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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
$149.00
$57.00
Dees
$114.00
$51.00
Direct materials per unit
Direct labor per unit
Direct labor hours per unit
1.5
2.0
Annual production
29,500
35,000
Information about the company's estimated manufacturing overhead for the year follows:
Estimated
Activities
Activity measures
overhead cost
$3,218,250
$201,000
$194,950
$3,614,200
Supervision and maintenance
Direct labor hours
Batch costs
Number of batches
Number of engineering hours
Engineering changes
Total estimated manufacturing overhead for the year
Total estimated direct labor hours for the company for the year are 114,250 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
Dees
Total
Direct labor hours
44,250
70,000
114,250
Batches
2,250
500
2,750
Engineering hours
1,650
900
2,550
The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity – based costing system would be closest to (Do not round intermediate calculations and round the final answer to the nearest cent.)
...
A. $32.20
В. $70.41
С. $103.26
O D. $59.35
Expert Solution
Step 1
Solution
Working note
Calculation of the activity rate
|
Activity |
Cost |
Activity measures |
Total number of activity |
Activity rate |
|
Supervision and maintenance |
3218250 |
Direct labor hours |
114250 |
28.17 |
|
Batch costs |
201000 |
Number of batches |
2750 |
73.09 |
|
Engineering changes |
194950 |
Number of engineering hours |
2550 |
76.45 |
|
total |
3614200
|
|
|
|
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