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 B60E 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 B60E is closest to:

Quizplus · Accepted Answer

The company's plantwide overhead rate is computed as follows:
 11eacbfc_c66c_882f_8ffe_a55036ad6a59_TB7552_00 Using the plantwide overhead rate, the manufacturing overhead cost that would be allocated to Product B60E is computed as follows:
 11eacbfc_c66c_8830_8ffe_eb6ec002be04_TB7552_00 Using the plantwide overhead rate, the percentage of the total overhead cost allocated to Product B60E is computed as follows:
 11eacbfc_c66c_af41_8ffe_e7195170ed4a_TB7552_00

Meli Corporation Manufactures Two Products: Product L61P and Product B60E