Carter Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $\begin{array}{llll}& \text { Number of } & \text { Number of } & \text { Number of } \
\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\
\text { Standard } & 22 & 8 & 375 \
\text { Deluxe } & 28 & 12 & 225 \
\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000
\end{array}$ is the total amount of overhead costs assigned to the deluxe model assuming traditional costing and applying overhead costs based on direct labor hours is used.

Question

Quizplus · Accepted Answer

Under traditional costing, overhead is applied based on direct labor hours (DLH). The total DLH is 600 (375 for Standard + 225 for Deluxe). The overhead rate per DLH is $60,000 / 600 = $100. For the Deluxe model, the overhead assigned is 225 DLH * $100 = $22,500.

Carter Company Manufactures Two Models of Pens-A Standard and a Deluxe