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 102,500 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 (Round all answers to two decimal places.)
A)$11.76
B)$23.52
C)$70.56
D)$10.81

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 102,500 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 (Round all answers to two decimal places.)
A)$11.76 
B)$23.52 
C)$70.56 
D)$10.81

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 102,500 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 (Round all answers to two decimal places.)
A)$11.76 
B)$23.52 
C)$70.56 
D)$10.81

Kepple Manufacturing Currently Uses a Traditional Costing System