MarkersRUs (MRU) specializes in manufacturing and selling deluxe markers.

All deluxe markers are monogrammed with a logo of choice on the marker barrel. MRU uses job-order costing to cost each marker order.

The average # of markers in each order during 2020 was 10. While all marker orders are monogrammed, the variety of monograms plus the variety of barrel material and marker nibs for each marker style results in a wide range of manufacturing times for deluxe markers.

Key financial information regarding calendar year 2020 is listed in Exhibit 1

Exhibit 1	Year 2020
Budgeted Overhead	$280,000
Actual Overhead	$260,000
Actual Direct Labor Hours	11,200
Actual Printer Hours	6,000
Budgeted Direct Labor Hours	10,000
Budgeted Printer Hours	5,600
# of estimated manufacturing marker orders	4,000
# of actual manufacturing marker orders	5,000
Budgeted Direct Labor rate per hour	$25.00
Actual Direct Labor Rate per hour	$26.00

Part A

In 2019, MRU allocated overhead based on marker orders produced. In 2020, MRU changed its overhead allocation methodology: allocating

overhead based on direct labor hours. Now that 2020 has passed. MRU is contemplating yet another overhead allocation change; this time

allocating overhead based on printing hours to determine if printing hours is the most effective overhead allocation technique

Using the information in Exhibit 1 above, what is the 2020 predetermined overhead rate based on the if of marker orders, direct labor hour,

and printer hours?

# of Marker Orders (per order)	???
Direct Labor Hours (per DL hr.)	???
Printer Hours (per Printer hr.)	???

Part B

Based on the three overhead rates computed in Question 1, above, which of the following statements is correct?

(A) Allocating oh based on the # of marker orders results in the highest overhead rate Using this rate will cause MRU to set selling prices high to maximise

profits.

(B) Allocating oh based on direct labor hours results in the lowest overhead rate. Using this rate results in the lowest product cost and therefore will

generate the greatest profits for the company.

(C) Allocating oh based on printing hours results in a rate in between the rate based on orders and the rate based on direct labor hours. Using this rate

results results in the most accurate product cost as all markers orders require similar printing times.

(D) Allocating oh based on # of marker orders produces the most accurate product cost as all orders take about the same amount of time to complete

(E) The Oh rate based on direct labor hours is the lowest. Because accounting always advocates for using the lowest cost. MRU should use il for costing marker orders.

(F) None of the above

Part C

In April 2020, MRU received from NYU's Virtual Graduation Committee, 75 fountain marker orders, with 10 markers to each order.

These marker orders (monogrammed with an NYU Logo and "Class of 2020*) were to be sent to all 600 seniors and 50 2nd year MBA

graduate students who were to graduate in May 2020 virtually as the in-person graduation ceremony was postponed. Markers were

also to be sent to the 100 faculty members, trustees, and college staff administering the virtual graduation.

The order cost was as follows:

Blue Marker Barrels and Brass Nibs	$32.00	Per marker
Ink used for monogramming	$5.00	Per marker
Estimated direct labor hours to complete order	125	For entire order
Estimated printer hours to complete order	62.5	For entire order
Actual direct labor hours to complete order	150	For entire order
Actual printer hours to complete order	75	For entire order

Writing ink is shipped and sold separately and its cost is not included in this order.

Using the order information above and financial information in Exhibit 1 and question 1, what would MRU record as the cost of this special

2020 commencement marker order when it was completed?

Total Material Cost	???
Total Labor Cost	???
Total Overhead Cost (based on direct labor hours)	???