Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Feauto Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct

Feauto Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, I63E and E76I, about which it has provided the following data:

I63E E76I
Direct materials per unit $ 22.20 $ 66.60
Direct labor per unit $ 17.50 $ 52.50
Direct labor-hours per unit 0.50 1.50
Annual production (units) 84,000 28,000

The company's estimated total manufacturing overhead for the year is $3,141,600 and the company's estimated total direct labor-hours for the year is 84,000.

The company is considering using a form of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures Estimated Overhead Cost
Assembling products (DLHs) $ 2,100,000
Preparing batches (batches) 186,000
Product support (product variations) 855,600
Total $ 3,141,600

Expected Activity
I63E E76I Total
DLHs 42,000 42,000 84,000
Batches 1,130 630 1,760
Product variations 2,260 1,260 3,520

The manufacturing overhead that would be applied to a unit of product I63E under the company's traditional costing system is closest to:

Multiple Choice

  • $37.40

  • $56.10

  • $37.40

  • $18.70

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Integrated Audit Practice Case

Authors: David S. Kerr, Randal J. Elder, Alvin A. Arena

6th Edition

0912503564, 9780912503561

More Books

Students also viewed these Accounting questions

Question

9. What is the difference between systematic and unsystematic risk?

Answered: 1 week ago