Use the following to answer questions:
Binegar Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, R58G and R09O, about which it has provided the following data:
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|
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R58G
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R09O
|
|
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Direct materials per unit...........
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$15.90
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$52.40
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|
|
Direct labor per unit.................
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$1.30
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$27.30
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|
|
Direct labor-hours per unit.......
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0.10
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2.10
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|
|
Annual production...................
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30,000
|
10,000
|
The company's estimated total manufacturing overhead for the year is $1,617,600 and the company's estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
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Activities and Activity Measures
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Estimated Overhead Cost
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|
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Assembling products (DLHs)...............
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$ 696,000
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|
|
Preparing batches (batches)..................
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252,000
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|
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Product support (product variations)....
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669,600
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|
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Total......................................................
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$1,617,600
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|
|
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Expected Activity
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|
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R58G
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R09O
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Total
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|
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DLHs...........................
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3,000
|
21,000
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24,000
|
|
|
Batches........................
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528
|
1,152
|
1,680
|
|
|
Product variations........
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1,056
|
1,176
|
2,232
|
1. The manufacturing overhead that would be applied to a unit of product R58G under the company's traditional costing system is closest to:
A) $6.74
B) $16.10
C) $22.84
D) $2.90
2. The manufacturing overhead that would be applied to a unit of product R09O under the activity-based costing system is closest to:
A) $113.46
B) $255.00
C) $141.54
D) $17.28