Question
Extracts from cost information of Hebar Corp.: Simple L3 Pack Complex L7 Pack Total Setup cost allocated using direct labor-hours $19,250 $5,750 $25,000 Setup cost
Extracts from cost information of Hebar Corp.:
| Simple L3 Pack | Complex L7 Pack | Total | |
| Setup cost allocated using direct labor-hours | $19,250 | $5,750 | $25,000 |
| Setup cost allocated using setup-hours | $13,400 | $11,600 | $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. L7 pack is undercosted by $5,750
B. L3 pack is overcosted by $5,850
C. L3 pack is undercosted by $5,850
D. L7 pack is overcosted by $5,850
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
