Stevie has been allocating Manufacturing Overhead (MOH) costs to her products using a single plant-wide rate of $14.00 per Direct Labor (DL) hour. A recent job required 347 DL hours, 42 production runs, 25 quality inspections, and 20 factory supervisor hours. Based on the increased activity, the accountants are suggesting a transition to Activity-Based Costing (ABC) and have suggested the following rates:
Materials Handling: $9.75 per direct labor hour
Production Setup: $18.50 per production run
Quality Inspections: $6.00 per inspection
Factory Supervisor: $12.30 per supervisor hour
Assuming that Stevie makes the switch to ABC, what are the total MOH costs allocated to the most recent production run?
A) $1,173.00
B) $1,388.00
C) $3,383.25
D) $4,556.25

Question

Quizplus · Accepted Answer

Calculate MOH costs based on the ABC method: ($9.75 × 347 DL hours) + ($18.50 × 42 production runs) + ($6.00 × 25 inspections) + ($12.30 × 20 supervisor hours) = $3,383.25 + $777.00 + $150.00 + $246.00 = $4,556.25 (Choice D).

Stevie Has Been Allocating Manufacturing Overhead (MOH) Costs to Her