Trojan Corp. creates miniature wooden figurines that it sells to local stores around the state. Trojan is switching to Activity-Based Costing (ABC) and has arrived at the following activity-based rates for their Manufacturing Overhead (MOH) allocation: $22.00 per direct labor hour, $17.50 per packaging hour, and $8.60 per inspection hour. A recent job required the following:
780 direct labor hours
182 packaging hours
93 inspection hours
What is the amount of MOH that would be allocated to this most recent job based upon the predetermined activity-based rates?
A) $17,634.80
B) $20,345.00
C) $21,144.80
D) $21,963.80

Question

Quizplus · Accepted Answer

This question requires that you calculate the MOH allocation for each activity based upon rates determined by Trojan Corp.: direct labor hours = $22.00 per direct labor times 780 direct labor hours = $17,160.00; packaging hours = $17.50 per packaging hour times 182 packaging hours = $3,185.00; inspection hours = $8.60 per inspection hour times 93 inspection hours = $799.80. The total of all allocated MOH will be the total of the three activities or $21,144.80 (Choice C).