Asked by Beatriz Sarai on Jun 18, 2024
Verified
The overhead cost per unit of Product B under the traditional costing system is closest to:
A) $2.34
B) $7.74
C) $4.77
D) $34.38
Overhead Cost
The ongoing, general business expenses not directly tied to producing goods or services but necessary for running the business.
Traditional Costing
A costing method that assigns factory overhead to products based on volume-related measures such as direct labor hours or machine hours.
Product B
A generic term used to differentiate one product from another in a specific context, often used for analysis, comparison, or as an example.
- Grasp the methodology of allocating indirect expenses via traditional costing systems.
- Using direct labor hours as a measure for overhead allocation in traditional cost systems, identify the cost per unit.
Verified Answer
LP
Lauren PryorJun 25, 2024
Final Answer :
D
Explanation :
Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base = $68,756 ÷ 400 DLHs = $171.89 per DLH
Overhead cost per unit of Product B = ($171.89 per DLH × 200 DLHs)÷ 1,000 units = $34.38 per unit
Overhead cost per unit of Product B = ($171.89 per DLH × 200 DLHs)÷ 1,000 units = $34.38 per unit
Learning Objectives
- Grasp the methodology of allocating indirect expenses via traditional costing systems.
- Using direct labor hours as a measure for overhead allocation in traditional cost systems, identify the cost per unit.