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Annual production in units A B C 50,000 50,000 50,000 150,000 Total Direct labor hours 25,000 25,000 25,000 75,000 Number of set-ups 150 150 150
Annual production in units A B C 50,000 50,000 50,000 150,000 Total Direct labor hours 25,000 25,000 25,000 75,000 Number of set-ups 150 150 150 450 Inspection hours 1,500 1,000 500 3,000 Assume that manufacturing overhead consists of costs related to set-ups and inspections. Suppose the company uses a single plant-wide rate based on direct labor hours to allocate overhead to its three product-lines. Which product-line(s) are costed correctly, under-costed, and/or over-costed due to the use of the traditional method of allocating overhead instead of an activity-based costing method? A C costed correctly under-costed over-costed A under-costed B C costed correctly over-costed A B C over-costed costed correctly under-costed A B C costed correctly costed correctly costed correctly A B C costed correctly over-costed under-costed
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