G Exam 4 (Chapters 7 &9) coezto.mheducation.com/hm.tpx Exam 4 (Chapters 7 & 9) n
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G Exam 4 (Chapters 7 &9) coezto.mheducation.com/hm.tpx Exam 4 (Chapters 7 & 9) nstructions I help Question 21 (of 22) Save & Exit Submit Time remaining: 2:03:00 21 Markham Company makes two products: Basic Product and Deluxe Product. Annual production and sales unts of Basic Product and 1,000 units of Deluxe Product. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Basic Product requires 04 direct labor hours per unit and Deluxe Product requires 0.8 direct labor hours per unit. The total estimated overheed for next perlod is $99.485 The company is considering switching to an activity based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools- Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows Overheag Deluxe Activity Cost Pool Activity 1 Activity 2 General Factory CostsBasic Product uctTotel $30696 7,595 51194 99,485 1100 700 560 2.000 2.200 1.360 900 Total The overhead cost per unlt of Deluxe Product under the traditional costing system is closest to: ·$58.52 O S6.40 O $12 28 O $30.11 0 Type here to searchExplanation / Answer
Budgeted labour hour = (1400*.40+1000*.80) = 1360 per labour hour
Overhead rate = 99485/1360 = 73.15 per hour
Overhead applied to deluxe = 1000*.80*73.15 = 58520
Overhead cost per unit of deluxe = 58520/1000 = 58.52
so answer is a) $58.52
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