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 $ 26.60 $ 66.60 Direct labor per unit $ 9.00 $ 27.00 Direct labor-hours per unit 0.20 1.00 Annual production (units) 46,300 18,700 The company's estimated total manufacturing overhead for the year is $1,148,674 and the company's estimated total direct labor-hours for the year is 27,960. 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) $ 335,520 Setting up machines (setups) 406,651 Parts administration (part types) 406,503 Total $ 1,148,674 Expected Activity N06D M09K Total DLHs 9,260 18,700 27,960 Setups 1,150 957 2,107 Part types 629 332 961 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

Predetermined overhead rate = Estimated total manufacturing overhead/Estimated total direct labor hours = $1148674/27960 = $41.08 per direct labor hour

	N06D
Total direct labor hours	9260
x Overhead rate	41.08
Total manufacturing overhead applied	380400.8
÷ Number of units produced	46300
Manufacturing overhead applied per unit $	8.216

Kindly round off final answer as required since instructions provided only pertain to rounding off of intermediate calculations.