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Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor - hours $19,650 $5,350 $25,000
Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor - hours $19,650 $5,350 $25,000 Setup cost allocated using setup - hours $14,000 $11,000 $25,000 Assuming that setup - hours is considered a more effective cost drive for allocating setup costs than direct labor - hours. Which of the following statements is true of Hebar's setup costs under traditional costing? A. L3 pack is undercosted by $5,650 B. L7 pack is undercosted by $5,550 C. L7 pack is overcosted by $5,650 D. L3 pack is overcosted by $5,650
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