(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 C43S under the activity-based costing system is closest to:
A)$71.04
B)$138.96
C)$67.92
D)$11.04

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 C43S under the activity-based costing system is closest to:
A)$71.04 
B)$138.96 
C)$67.92 
D)$11.04

Quizplus · Accepted Answer

The activity rates for each activity cost pool are computed as follows:
 11eaa0c8_970d_357d_9cb2_858c3bfed860_TB2487_00 The overhead cost charged to Product C43S is:
 11eaa0c8_970d_357e_9cb2_5dce1b35932c_TB2487_00 Overhead applied to a unit of product C43S = $710, 400 ÷ 10, 000 units = $71.04 per unit

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