Question
National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Model Annual Sales in Units High F
National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.
Model | Annual Sales in Units |
High F | 11,300 |
Great P | 17,300 |
National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:
High F | Great P | |||||
Direct materials | $ | 39.30 | $ | 26.70 | ||
Direct labor | $ | 18.90 | $ | 14.50 | ||
Budget factory overhead: | |||||
Engineering and Design | 2,660 | engineering hours | $ | 425,600 | |
Quality Control | 13,090 | inspection hours | 350,190 | ||
Machinery | 33,970 | machine hours | 541,600 | ||
Miscellaneous Overhead | 26,650 | direct labor hours | 132,650 | ||
Total | $ | 1,450,040 | |||
National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:
High F | Great P | |
Engineering and design hours | 1,090 | 1,570 |
Quality control inspection hours | 5,770 | 7,320 |
Machine hours | 20,410 | 13,560 |
Labor hours | 12,130 | 14,520 |
What is the overhead application rate using the firm's volume-based costing system? (Rounded to the nearest percent or cents.)
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