(Appendix 4A)Koszyk 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, P85G and C43S, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2, 264, 000 and the company's estimated total direct labor-hours for the year is 40, 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: The manufacturing overhead that would be applied to a unit of product P85G under the company's traditional costing system is closest to:
A)$89.67
B)$45.28
C)$44.39
D)$23.20

Question

(Appendix 4A)Koszyk 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, P85G and C43S, about which it has provided the following data:  The company's estimated total manufacturing overhead for the year is $2, 264, 000 and the company's estimated total direct labor-hours for the year is 40, 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:   The manufacturing overhead that would be applied to a unit of product P85G under the company's traditional costing system is closest to:
A)$89.67 
B)$45.28 
C)$44.39 
D)$23.20

Quizplus · Accepted Answer

Direct labor-hour calculation:
 11eaa0c8_970c_7229_9cb2_43be6260435c_TB2487_00 Predetermined overhead rate = Total estimated overhead cost ÷ Total estimated direct labor-hours
= $2, 264, 000 ÷ 40, 000 direct labor-hours = $56.60 per direct labor-hour
Overhead applied to product P85G = $56.60 per direct labor-hour × 0.80 direct labor-hours per unit
= $45.28 per unit

(Appendix 4A)Koszyk Manufacturing Corporation Has a Traditional Costing System in Which