Asked by Serena Espino on Jul 06, 2024
Verified
If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product P9 would be closest to:
A) $159.12 per unit
B) $553.68 per unit
C) $452.28 per unit
D) $2,205.42 per unit
Direct Labor-Hours
Direct labor-hours refer to the total number of hours worked by employees that are directly involved in the manufacturing process of a company's products.
Traditional Costing
A costing method that applies indirect costs to products based on a predetermined overhead rate, often not considering the actual activities that incur costs.
Overhead Assigned
The process of allocating manufacturing overhead costs to specific units of product based on a predetermined rate or method.
- Understand the concept of overhead allocation using traditional costing methods.
Verified Answer
= $624,866 ÷ 1,700 DLHs = $367.57 per DLH (rounded)
Product P9: 6.0 DLHs × $367.57 per DLH = $2,205.42
Learning Objectives
- Understand the concept of overhead allocation using traditional costing methods.
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