Asked by Bailey Rayoum on Jun 20, 2024
Verified
Assuming the predetermined overhead rate is $10.00, what is the total overhead allocated to each washing mitt using the current costing system?
A) $2.00
B) $10.00
C) $4.00
D) $2.67
Predetermined Overhead Rate
A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period.
Costing System
A method for assessing and allocating costs of production, typically involving direct costs, indirect costs, and overheads.
Washing Mitt
A tool made of soft material used for washing surfaces, typically vehicles, without causing scratches.
- Understand the allocation of costs using different costing systems and their impact on product costing.
Verified Answer
MF
Mohammad FaresJun 22, 2024
Final Answer :
C
Explanation :
The total overhead allocated to each washing mitt using the current costing system would depend on the basis of allocation (e.g., per unit, labor hours, machine hours, etc.). Since the predetermined overhead rate is $10.00, and without additional context on the allocation base or the quantity related to it, it's not possible to accurately determine the overhead allocated per washing mitt. However, given the choices, $4.00 seems to be a selected figure without the context to support how it was derived.
Learning Objectives
- Understand the allocation of costs using different costing systems and their impact on product costing.