Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Information about the company's estimated manufacturing overhead for the year follows:
Total estimated direct labor hours for the company for the year are 149,250 hours.
The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows:
The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity-based costing system would be closest to (Round all answers to two decimal places.)
A)$94.79
B)$107.24
C)$66.32
D)$40.98

Question

Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products:  Information about the company's estimated manufacturing overhead for the year follows:
 Total estimated direct labor hours for the company for the year are 149,250 hours.
The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows:
 The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity-based costing system would be closest to (Round all answers to two decimal places.)
A)$94.79 
B)$107.24 
C)$66.32 
D)$40.98

Quizplus · Accepted Answer

The Answer of Cross Roads Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products:  Information about the company's estimated manufacturing overhead for the year follows:
 Total estimated direct labor hours for the company for the year are 149,250 hours.
The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows:
 The amount of manufacturing overhead that would be allocated to one unit of Dees using an activity-based costing system would be closest to (Round all answers to two decimal places.)
A)$94.79 
B)$107.24 
C)$66.32 
D)$40.98

Cross Roads Manufacturing Currently Uses a Traditional Costing System