Question
MorningDew Manufacturing has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours
MorningDew Manufacturing 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:
The company's estimated total manufacturing overhead for the year is $1,632,986 and the company's estimated total direct labor-hours for the year is 30,220.
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:
The manufacturing overhead that would be applied to a unit of product M09K under the activity-based costing system is closest to:
Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) NOOD $ 31.80 $ 10.00 0.20 45,600 MOOK $ 63.30 $ 27.00 1.00 21,100 Activities and Activity Measures Supporting direct labor (direct labor-hours) Setting up machines (setups) Parts administration (part types) Total Estimated Overhead Cost $ 695,060 551,702 386,224 $ 1,632,986 Direct labor-hours Setups Part types Expected Activity NOOD MOOK Total 9,120 21,100 30, 220 1,450 1,024 2,474 677 279 956Step by Step Solution
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