Feauto 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, 163E and E761, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) The company's estimated total manufacturing overhead for the year is $3,345,900 and the company's estimated total direct labor-hours for the year is 91,200. 163E 163E $23.00 $19.00 The company is considering using a form of activity- based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Assembling products (direct labor-hours) Preparing batches (batches) Product support (product variations) Total Direct labor-hours. 0.80 57,000 Batches Expected Activity E76I 45,600 1,070 2,140 E76I $69.00 $ 57.00 2.40 19,000 Total 45,600 730 1,460 Estimated Overhead Cost $ 2,280,000 243, 100 822,800 $ 3,345,900 91,200 1,800 3,600 Product variations The manufacturing overhead that would be applied to a unit of product 163E under the company's traditional costing system is closest to: Multiple Choice $88.05
Feauto 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, 163E and E761, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production (units) The company's estimated total manufacturing overhead for the year is $3,345,900 and the company's estimated total direct labor-hours for the year is 91,200. 163E 163E $23.00 $19.00 The company is considering using a form of activity- based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Assembling products (direct labor-hours) Preparing batches (batches) Product support (product variations) Total Direct labor-hours. 0.80 57,000 Batches Expected Activity E76I 45,600 1,070 2,140 E76I $69.00 $ 57.00 2.40 19,000 Total 45,600 730 1,460 Estimated Overhead Cost $ 2,280,000 243, 100 822,800 $ 3,345,900 91,200 1,800 3,600 Product variations The manufacturing overhead that would be applied to a unit of product 163E under the company's traditional costing system is closest to: Multiple Choice $88.05
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter12: Activity-based Management
Section: Chapter Questions
Problem 1CE: Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and...
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Transcribed Image Text:Feauto 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, 163E and E761, about which
it has provided the following data:
Direct materials per unit
Direct labor per unit
Direct labor-hours per unit
Annual production (units)
The company's estimated total manufacturing
overhead for the year is $3,345,900 and the company's
estimated total direct labor-hours for the year is 91,200.
163E
163E
$23.00
$19.00
The company is considering using a form of activity-
based costing to determine its unit product costs for
external reports. Data for this proposed activity-based
costing system appear below:
Activities and Activity Measures
Assembling products (direct labor-hours)
Preparing batches (batches)
Product support (product variations)
Total
0.80
57,000
Expected
Activity
E76I
Batches
45,600
1,070
2,140
E76I
$69.00
$ 57.00
2.40
19,000
Total
45,600
Direct labor-hours.
Product variations
The manufacturing overhead that would be applied to a
unit of product 163E under the company's traditional
costing system is closest to:
Multiple Choice
730
1,460
Estimated Overhead
Cost
$ 2,280,000
243, 100
822,800
$ 3,345,900
91,200
1,800
3,600
$88.05
$58.70
$29.35
$36.69
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