Question

Torello Corporation manufactures two products: Product H95V and Product V93N. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products H95V and V93N. Activity Cost Pool Machining Machine setups Activity Measure Total Cost Total Activity Machine-hours $24200 0 11,000 MHs $140,000 350 setups $ 70,000 2products $270,000 10,000 DLHs Number of setups Number of products Product design General factory Direct labor-hours Product Product H95V V93N Activity Measure Machine-hours Number of setups Number of products Direct labor-hours 6,000 5,000 100 250 6,000 4,000 Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product H95V?

Answer 1

Answer is C. $ 433200
Explanation:
Total OH (242000+140000+70000+270000):				722,000
Divide: Total DLH				10000
Plantwide OH rate per DLH				72.20
DLH used in Product H95V				6000
Oh rate per DLH				72.2
Total OH applied (6000*72.20)				433200