Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:...

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Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:...

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:

Cost Pools	Budgeted Cost		Cost Driver	Cost Driver Level
Setup	$	61,000	Number of setups	305
Ordering		30,500	Number of orders	1,525
Maintenance		76,250	Machine hours	7,625
Power		15,250	Kilowatt hours	15,250

Total direct labor hours budgeted = 3,050 hours.

The following data applies to Product X, one of the products completed during the year.


Direct materials	$	1,525
Direct labor	$	1,830
Units completed		160
Direct labor hours		61
Number of setups		6
Number of orders		12
Machine hours		60
Kilowatt hours		120

If a volume-based costing system based on direct labor hours to assign overhead is used, the total overhead cost for Product X will be:

Multiple Choice

$2,124.
$2,184.
$3,050.
$3,660.
$3,184.

business accounting

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Answer 1

Answer #1

Correct answer-----------$3,660

Working

(A)	Budgeted Manufacturing Overheads	$ 183,000*
(B)	Budgeted Direct labor hours	3,050
C= (A/B)	Predetermined Overhead rate	$ 60.00

(D)	Actual Direct labor hours	61

E=(DxC)	Overheads Applied	$ 3,660

*Budgeted cost = 61000+30500+76250+15250

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Answer 2

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