Question
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
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: Direct materials per unit Direct labor per unit Direct labor hours per unit Annual production Zips $150 Dees $110 $59 $46 3.5 29,500 3 39,000 Information about the company's estimated manufacturing overhead for the year follows: Activities Activity measures Supervision and maintenance Direct labor hours Batch costs Number of batches. Estimated overhead cost $3,211,250 $201.000 Activities Activity measures Supervision and maintenance Direct labor hours Batch costs Engineering changes Number of batches Number of engineering hours Total estimated manufacturing overhead for the year Estimated overhead cost $3,211,250 $201,000 $194,950 $3,607,200 Total estimated direct labor hours for the company for the year are 220,250 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: Direct labor hours Zips 103,250 Dees 117,000 Total 220,250 Direct labor hours Batches Engineering hours 103,250 117,000 2,050 1,950 700 1,200 220,250 2,750 3,150 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. $62.08 B. $46.96 C. $26.73 D. $92.49
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