Meli Corporation manufactures two products: Product L61P and Product B60E. 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 L61P and B60E. Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product L61P is closest to:

Question

Meli Corporation manufactures two products: Product L61P and Product B60E. 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 L61P and B60E.   Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product L61P is closest to:

Quizplus · Accepted Answer

The company's plantwide overhead rate is computed as follows:
 11eacbfc_c66b_ebea_8ffe_b5415c920812_TB7552_00 Using the plantwide overhead rate, the manufacturing overhead cost that would be allocated to Product L61P is computed as follows:
 11eacbfc_c66c_12fb_8ffe_2b97dda99cad_TB7552_00 Using the plantwide overhead rate, the percentage of the total overhead cost allocated to Product L61P is computed as follows:
 11eacbfc_c66c_12fc_8ffe_edae6fdc39b7_TB7552_00

Meli Corporation Manufactures Two Products: Product L61P and Product B60E