If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product A8 would be closest to:
A)$216.80 per unit
B)$85.28 per unit
C)$942.88 per unit
D)$647.28 per unit

Question

Quizplus · Accepted Answer

To calculate the overhead assigned to each unit of Product A8 using traditional costing method, we need to first calculate the predetermined overhead rate.
Predetermined overhead rate = Total estimated overhead cost / Total estimated direct labor hours
= ($1,084,400 + $544,600) / (30,000 + 10,000)
= $1,629,000 / 40,000
= $40.73 per direct labor hour

Now, we can calculate the overhead assigned to each unit of Product A8:
Overhead per unit = Predetermined overhead rate x Direct labor hours per unit
= $40.73 x 23.2
= $942.88

Therefore, the closest option is C) $942.88 per unit. Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $919,309 ÷ 7,800 DLHs = $117.86 per DLH (rounded)
Product A8: 8.0 DLHs × $117.86 per DLH = $942.88

If the Company Allocates All of Its Overhead Based on Direct