Kepple 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 110,000 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 Zips using the traditional costing system would be closest to
A)$35.35.
B)$23.57.
C)$47.14.
D)$32.86.

Question

Kepple 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 110,000 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 Zips using the traditional costing system would be closest to
A)$35.35. 
B)$23.57. 
C)$47.14. 
D)$32.86.

Quizplus · Accepted Answer

The Answer of Kepple 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 110,000 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 Zips using the traditional costing system would be closest to
A)$35.35. 
B)$23.57. 
C)$47.14. 
D)$32.86.

Kepple Manufacturing Currently Uses a Traditional Costing System