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Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead
Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Direct materials per unit Direct labor per unit Direct labor hours per unit Annual production Zips $120.00 $65.00 2.0 23,000 Dees $100.00 $40.00 1.5 45,000 Information about the company's estimated manufacturing overhead for the year follows: Activities Supervision and maintenance Batch costs Engineering changes Activity measures Direct labor hours Number of batches Number of engineering hours Total estimated manufacturing overhead for the year Estimated overhead cost $2,400,000 $216,500 $177.870 $2,794,370 Total estimated direct labor hours for the company for the year are 113,500 hours. The company evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows: Direct labor hours Batches Zips 46,000 2,200 Dees 67,500 500 Total 113,500 2,700 Direct labor per unit Direct labor hours per unit Annual production $65.00 2.0 23,000 $40.00 1.5 45,000 Information about the company's estimated manufacturing overhead for the year follows: Activities Supervision and maintenance Batch costs Engineering changes Activity measures Direct labor hours Number of batches Number of engineering hours i Total estimated manufacturing overhead for the year Estimated overhead cost $2,400,000 $216,500 $177.870 $2,794.370 Total estimated direct labor hours for the company for the year are 113,500 hours. The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows Direct labor hours Batches Engineering hours Zips 46,000 2,200 1,600 Dees 67.500 500 1,000 Total 113,500 2,700 2,600 The amount of manufacturing overhead that would be allocated to one unit of Zips using the traditional costing system would be closest to (Round all answers to two decimal places) A. $24.62 OB. $36.93 C. $34.58 OD. $49.24
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