Orear Corporation manufactures two products: Product Z34D and Product J25M. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Z34D and J25M. Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product J25M is closest to:

Question

Orear Corporation manufactures two products: Product Z34D and Product J25M. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Z34D and J25M.   Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product J25M is closest to:

Quizplus · Accepted Answer

The company's plantwide overhead rate is computed as follows: 11eacbfc_c65d_e2b8_8ffe_3710bfc4c14e_TB7552_00 Using the plantwide overhead rate, the manufacturing overhead cost that would be allocated to Product J25M is computed as follows:
 11eacbfc_c65e_09c9_8ffe_251564ebea1e_TB7552_00 Using the plantwide overhead rate, the percentage of the total overhead cost allocated to Product J25M is computed as follows:
 11eacbfc_c65e_09ca_8ffe_4523b114ee4d_TB7552_00

Orear Corporation Manufactures Two Products: Product Z34D and Product J25M