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Fletes Corporation manufactures two products: Product O95C and Product M31N. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing
Fletes Corporation manufactures two products: Product O95C and Product M31N. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products O95C and M31N.
Activity Cost Pool | Activity Measure | Total Cost | Total Activity | |||||||
Machining | Machine-hours | $ | 207,000 | 9,000 | MHs | |||||
Machine setups | Number of setups | $ | 140,000 | 350 | setups | |||||
Product design | Number of products | $ | 98,000 | 2 | products | |||||
General factory | Direct labor-hours | $ | 340,000 | 10,000 | DLHs | |||||
Activity Measure | Product O95C | Product M31N | ||||||||
Machine-hours | 6,000 | 3,000 | ||||||||
Number of setups | 190 | 160 | ||||||||
Number of products | 1 | 1 | ||||||||
Direct labor-hours | 4,000 | 6,000 | ||||||||
Using the ABC system, how much total manufacturing overhead cost would be assigned to Product O95C?
Multiple Choice
$399,000
$392,500
$263,000
$136,000
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