Question

#27 how do you solve it? the anser is A

Sphere Company produces two products, Alpha and Beta. Alpha is a high-volume item totaling 20,000 units annually, Beta is a low-volume item totaling only 6,000 units per year. Alpha requires one hour of direct labor for completion, while each unit of Beta requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $640,000. Sphere uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Beta would be assigned overhead of a. $20.00. b. $24.61. c. $40.00. d. need more information to compute. Minnie Moore Corporation has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. Est. Qyerhead Cost Driver Activity

Answer 1

Manufacturing overhead cost = $640,000

Direct labor hours = 32,000

Manufacturing overhead cost per hour = $640,000 / 32,000 = $20 per hour

Each units of Beta requires 2 hrs.

Overhead cost assigned to each unit of Beta = $20 per hour X 2 hrs = $40 per units of Beta

Option c.

Note: The answer is not option a. $20 overhead cost is assigned to each unit of Alpha. Each unit of Alpha requires 1 hour. $20 per hour X 1 hour = $20