Question
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
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$37.40
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$56.10
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$37.40
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$18.70
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