Ultimate Vision Corporation Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year:

LCD TV’s Projection TV’s

Units Produced 1,500 2,250

Direct labor hours per Unit 20 30

Material Moves per Product Line 15 20

Budgeted Materials Handling Cost $75,000

Total Machine Hours 10,000 16,000

Machine Maintenance Costs $180,000

Refer to Ultimate Vision Corporation.If the company uses an activity-based costing (ABC)system to allocate factory overhead,the materials handing cost allocated to projection TVs would be: A)$35,000 B)$45,000 C)$46,875 D)$51,923

Question

Ultimate Vision Corporation
Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year:

		LCD TV’s	Projection TV’s
Units Produced		1,500	2,250
Direct labor hours per Unit		20	30
Material Moves per Product Line		15	20
Budgeted Materials Handling Cost	$75,000
Total Machine Hours		10,000	16,000
Machine Maintenance Costs	$180,000

Refer to Ultimate Vision Corporation.If the company uses an activity-based costing (ABC)system to allocate factory overhead,the materials handing cost allocated to projection TVs would be: A)$35,000 B)$45,000 C)$46,875 D)$51,923

Quizplus · Accepted Answer

Using activity-based costing, the total materials handling costs of $187,500 will be allocated to the product lines based on their respective usage of the activity. 
The allocation rate for the projection line is: 
$75,000 ÷ 1,500 hours = $50/hour
The projection line uses 937.5 hours (50% of total) which results in an allocation of: 
937.5 hours × $50/hour = $46,875. Therefore, the materials handling cost allocated to projection TVs would be $46,875.

Ultimate Vision Corporation Ultimate Vision Corporation Has Two Product Lines: LCD Televisions and LCD