Questlion 34 (of 45) Save& Exit Su Time remaining: 0:5207 4. Pro Tool Company ex

Question

Questlion 34 (of 45) Save& Exit Su Time remaining: 0:5207 4. Pro Tool Company expects to produce 24,000 total units during the current perlod. The costs and cost drivers associated with four activity cost pools are given below BAT ACTIVITIES: UNIT BATCH PRODUCT FAC?L?TY Cost Cost Driver 4,000 labor hrs 100 set ups %ofuse 24,000 units Production of 1,000 units of an auto towing tool equired go abor hours. O setups, and consumed 30% of the product sustain LEVEL LEVELLEVEL 50,000 $20,000 $10,000 $120,000 g acti ues Ho much real e head cort- allocated to this product if the company alocates overhead on the basis of a single overhead allocation rate based on direct labor hours? O $18.400 O $10.000 $100.000 O $40,000

Explanation / Answer

Calculation of total overhead cost per direct labor hours: Particulars Amount Unit level 50000 Batch level 20000 Product level 10000 Facility level 120000 Total overhead cost 200000 Total direct labor hours 4000 Overhead cost per direct labor hour (200000/4000) 50 Total overhead cost for production of 1000 units= 50*800=$40000 So correct answer is $40000

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