Asked by zereniah mungate on Jun 23, 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 X2 would be closest to:
A) $132.60 per unit
B) $1,837.85 per unit
C) $376.90 per unit
D) $461.40 per unit
Overhead Assigned
The allocation of indirect costs to specific products, services, or activities within a business.
Traditional Costing
A costing methodology that allocates manufacturing overhead based on volume-related measures such as labor hours or machine hours.
Direct Labor-Hours
The total hours worked by employees directly involved in the production process, indicative of the labor input required to complete production tasks.
- Compute the allocation of overhead to products utilizing conventional costing approaches.
Verified Answer
NC
Nelly ChahineJun 27, 2024
Final Answer :
B
Explanation :
Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $624,866 ÷ 1,700 DLHs = $367.57 per DLH (rounded)
Product X2: 5.0 DLHs × $367.57 per DLH = $1,837.85
= $624,866 ÷ 1,700 DLHs = $367.57 per DLH (rounded)
Product X2: 5.0 DLHs × $367.57 per DLH = $1,837.85
Learning Objectives
- Compute the allocation of overhead to products utilizing conventional costing approaches.