Accurso,Inc. ,manufactures and sells two products: Product J9 and Product S5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $22.50 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the predetermined overhead rate would be closest to:
A)$26.55 per DLH
B)$41.94 per DLH
C)$28.94 per DLH
D)$129.66 per DLH

Question

Accurso,Inc. ,manufactures and sells two products: Product J9 and Product S5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The direct labor rate is $22.50 per DLH.The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the predetermined overhead rate would be closest to:
A)$26.55 per DLH 
B)$41.94 per DLH 
C)$28.94 per DLH 
D)$129.66 per DLH

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $544,566 ÷ 4,200 DLHs = $129.66 per DLH (rounded)