Problem
Racer X Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled:
Standard:
Number of Setups 15
Number of Components 10
Number of Direct Labor Hours 750
Deluxe:
Number of Setups 35
Number of Components 15
Number of Direct Labor Hours: 500
Overhead Costs:
Setups: $15000
Components $25000
Number of setups and number of components are identified as activity-cost drivers for overhead. Assume a traditional costing system applies the $40,000 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the standard model?