Question

Look Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, N06D and M09K, about which it has provided the following data: N06D M09K Direct materials per unit $ 26.30 $ 64.80 Direct labor per unit $ 13.00 $ 29.00 Direct labor-hours per unit 0.20 1.00 Annual production (units) 46,700 21,100 The company's estimated total manufacturing overhead for the year is $1,402,332 and the company's estimated total direct labor-hours for the year is 30,440. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (DLHs) $ 578,360 Setting up machines (setups) 386,052 Parts administration (part types) 437,920 Total $ 1,402,332 Expected Activity N06D M09K Total DLHs 9,340 21,100 30,440 Setups 1,460 968 2,428 Part types 628 324 952 The manufacturing overhead that would be applied to a unit of product N06D under the company's traditional costing system is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Calculations of overhead applied under traditional method. $ Divide Estimated Overhead Estimated Direct Labor hours Predetermined Overhead rate 1,402,332 30440 46.07 NOOD Direct Labor Hour required per unit Multiply Predetermined Overhead rate Overhead cost assigned per unit 0.20 46.07 9.21 $ First calculate predetermined OH rate than multiply it with direct labor per unit.