Question
Look Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Look 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, N06D and M09K, about which it has provided the following data:
N06DM09KDirect materials per unit$ 31.50$ 66.30Direct labor per unit$ 14.00$ 26.00Direct labor-hours per unit0.201.00Annual production (units)45,30021,200The company's estimated total manufacturing overhead for the year is $1,492,786 and the company's estimated total direct labor-hours for the year is 30,260.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Activities and Activity MeasuresEstimated Overhead CostSupporting direct labor (direct labor-hours)$ 665,720Setting up machines (setups)445,266Parts administration (part types)381,800Total$ 1,492,786Expected ActivityN06DM09KTotalDirect labor-hours9,06021,20030,260Setups1,5709892,559Part types668252920The manufacturing overhead that would be applied to a unit of product N06D under the company's traditional costing system is closest to:
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