Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following...
Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:
|
Product |
Number of Setups |
Number of Components |
Number of Direct Labor Hours |
|
|
Standard |
18 |
6 |
265 |
|
|
Deluxe |
29 |
12 |
200 |
|
|
Overhead Costs |
$61,100 |
$64,800 |
Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)
A. $36,929
B. $71,749
C. $62,950
D. $54,151
Homework Answers
| Ans. | Option B $71,249 | ||
| Calculations: | |||
| *Total overhead cost = $61,100 + $64,800 = $125,900 | |||
| *Total direct labor hours = 265 + 200 = 465 hours | |||
| Allocation rate = Total overhead cost / Total direct labor hours | |||
| $125,900 / 465 | |||
| $270.7527 | per hour | ||
| Overhead cost assigned to Standard model = Allocation rate * Direct labor hours of Standard model | |||
| $270.75 * 265 | |||
| $71,749 | |||
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