Vector Company manufactures a number of different products. In its traditional costing system, overhead costs are allocated based on a predetermined rate. The company recently switched to an activity-based costing system using different cost drivers for each of their two activities. Information is as follows: Job #16 required 22 labor hours and 3 designs. By how much would this job have been over or undercosted under the traditional costing system?
A) Undercosted by $96
B) Undercosted by $71.09
C) Overcosted by $96
D) Undercosted by $53.76

Question

Vector Company manufactures a number of different products. In its traditional costing system, overhead costs are allocated based on a predetermined rate. The company recently switched to an activity-based costing system using different cost drivers for each of their two activities. Information is as follows:  Job #16 required 22 labor hours and 3 designs. By how much would this job have been over or undercosted under the traditional costing system?
A) Undercosted by $96 
B) Undercosted by $71.09 
C) Overcosted by $96 
D) Undercosted by $53.76

Quizplus · Accepted Answer

The Answer of Vector Company manufactures a number of different products. In its traditional costing system, overhead costs are allocated based on a predetermined rate. The company recently switched to an activity-based costing system using different cost drivers for each of their two activities. Information is as follows:  Job #16 required 22 labor hours and 3 designs. By how much would this job have been over or undercosted under the traditional costing system?
A) Undercosted by $96 
B) Undercosted by $71.09 
C) Overcosted by $96 
D) Undercosted by $53.76

Vector Company Manufactures a Number of Different Products