4 PTS Wharton, Inc. produces two products, M-24 and L-Z15. M-24 is ahigh-volume item totaling 25,000 units annually, while L-Z15 is alow-volume item totaling 8,000 units per year. M-24 requires 1.5hours of direct labor per unit, while each unit of L-Z15 requires 3hours. Therefore, total annual direct labor hours are 64,500(37,500 + 24,000). Expected annual manufacturing overheadcosts are $2,100,000. Wharton uses a traditional costing systemand assigns overhead based on direct labor hours. Each unit of L-Z15 would be assigned overhead ofa) $85.00b) $97.68c) $115.00d) $120.50

Explanation of Overhead Allocation: Overhead allocation is the process of assigning indirect costs,…

Answered: Wharton, Inc. produces two products,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1PA: Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the...

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Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
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