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National Inc manufactures two models of CMD that can be used as cell phones, MPXand digital camcorders Model High F Great P Annual Sales in Units 11,380 17,3ee National uses a volume based costing system to apply factory overhead based on direct labor dollars

Accounting Nov 02, 2020

National Inc manufactures two models of CMD that can be used as cell phones, MPXand digital camcorders Model High F Great P Annual Sales in Units 11,380 17,3ee National uses a volume based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows High F Great P Direct materials $39.38 $26.70 Direct labor $18.90 $14.50 Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total 2,660 engineering hours 13,000 inspection hours 33,970 machine hours 26,650 direct labor hours $ 125,600 350,190 541,600 132,650 $1,450,040 National's controller had been researching activity based costing and decided to switch tot. A special study determined Nationals two products have the following budgeted activities
National's controller had been researching activity based costing and decided to switch to it. A special study determined Nationals two products have the following budgeted activities Engineering and design hours Quality control inspection hours Machine hours Labor hours High F Great P 1,090 1,57 5,770 7,320 20,410 13,560 12,138 14,520 Using the firm's volume based costing applied factory overhead per unit for the High F model (Rounded to the nearest cent)
Multiple Choice $59.01 $45.27 O $58.10. O $62.99 $46.12

Expert Solution

Answer : Correct Option is $59.01

Reason :

Calculation of Applied Factory Overhead on the basis of Firm's Volme Based Costing

Total Direct Labour Cost = (11300 * 18.90) + (17300 * 14.50 ) = 464420

Factory Overhead per unit of Direct Labour Cost = 1450040 / 464420 = 3.12 per Direct labour Hour

Applied Factory Overhead per unit on High F = 3.12 * 18.90 = 59.01

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