Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to thecompany's two products:ZipsDeesDirect materials per unitDirect labor per unit$148$120$54$49Direct labor hours per unit2.51Annual production23,50039,000Information about the company's estimated manufacturing overhead for the year follows:EstimatedActivitiesActivity measuresDirect labor hoursoverhead cost$3,214,250$199,000Supervision and maintenanceNumber of batchesBatch costsO A. $92.52O B. $58.43O C. $35.21D. $21.97 Direct labor hours$3,214,250Supervision and maintenanceBatch costs$199,000Number of batchesNumber of engineering hours$194,950Engineering changes$3,608,200Total estimated manufacturing overhead for the yearTotal estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed forthe activity based costing system followsZips58,750DeesTotalDirect labor hours39,00097,750Batches2,3503002,650Engineering hours2,0501,1003,150The amount of manufacturing overhead that would be allocated to one unit of Dees using an activitybased costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.)O A. $92.52O B. $58.43O C. $35.21D. $21.97

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Asked Oct 7, 2019
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Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the
company's two products:
Zips
Dees
Direct materials per unit
Direct labor per unit
$148
$120
$54
$49
Direct labor hours per unit
2.5
1
Annual production
23,500
39,000
Information about the company's estimated manufacturing overhead for the year follows:
Estimated
Activities
Activity measures
Direct labor hours
overhead cost
$3,214,250
$199,000
Supervision and maintenance
Number of batches
Batch costs
O A. $92.52
O B. $58.43
O C. $35.21
D. $21.97
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Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Zips Dees Direct materials per unit Direct labor per unit $148 $120 $54 $49 Direct labor hours per unit 2.5 1 Annual production 23,500 39,000 Information about the company's estimated manufacturing overhead for the year follows: Estimated Activities Activity measures Direct labor hours overhead cost $3,214,250 $199,000 Supervision and maintenance Number of batches Batch costs O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97

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Direct labor hours
$3,214,250
Supervision and maintenance
Batch costs
$199,000
Number of batches
Number of engineering hours
$194,950
Engineering changes
$3,608,200
Total estimated manufacturing overhead for the year
Total estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed for
the activity based costing system follows
Zips
58,750
Dees
Total
Direct labor hours
39,000
97,750
Batches
2,350
300
2,650
Engineering hours
2,050
1,100
3,150
The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity
based costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.)
O A. $92.52
O B. $58.43
O C. $35.21
D. $21.97
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Direct labor hours $3,214,250 Supervision and maintenance Batch costs $199,000 Number of batches Number of engineering hours $194,950 Engineering changes $3,608,200 Total estimated manufacturing overhead for the year Total estimated direct labor hours for the company for the year are 97,750 hours. The company is evaluating whether it should use an activity - based costing system in place of its traditional costing system. Additional information about production needed for the activity based costing system follows Zips 58,750 Dees Total Direct labor hours 39,000 97,750 Batches 2,350 300 2,650 Engineering hours 2,050 1,100 3,150 The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity based costing system would be closeest to (Do not round intermediate calculations and round the final answer to the nearest cent.) O A. $92.52 O B. $58.43 O C. $35.21 D. $21.97

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Expert Answer

Step 1

In an activity based costing system, the costs are allocated based on each activity to individual products. The individual usage is divided by total activity which is mutiplied with total activity cost to arrive at the activity cost of each product.

Step 2

The computation of overhead cost...

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Workings 39,000 Dees Annual production (p) Supervision and maintenance (a) Batch costs (b) Engineering changes Total manufacturing OH allocated d -a+b+c Manufacturing OH allocated per unit (d/p) 1282412 (39,000/97750*3214250) 22528.3 (300/2650*199000) 68077.78 (1100/3150*194950) 1373018 35.21

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Activity Based Costing

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