Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / National Inc
National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Model High F Great P Annual Sales in Units 11,300 17,300 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: Direct materials Direct labor High F $39.30 $18.90 Great P $26.70 $14.50 Budget factory overhead: Engineering and Design Quality Control Machinery Miscellaneous Overhead Total 2,660 engineering hours 13,090 inspection hours 33,970 machine hours 26,650 direct labor hours $ 425,600 350,190 541,600 132,650 $1,450,040 National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's 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 1,570 5,770 7,320 20,410 13,560 12,130 14,520 Using the firm's volume-based costing, applied factory overhead per unit for the High F model is: (Rounded to the nearest cent.) Multiple Choice $59.01. $45.27
$58.10. O $62.99. O $46.12.
Data given in the question
| High F | Great P | Total | |
| Annual Sales | 11,300 | 17,300 | 28,600 |
Productwise labor cost
| Cost | High F | Great P | Total |
| Direct Labor cost | 18.90 | 14.50 | |
| Total Direct labor cost (Units x DLC p.u.) | 213,750 | 250,850 | 464,420 |
Total Budgeted factory overheads = $ 1,450,040
Therefore budgeted overhead per dollar of direct labor cost as per volume based costing system (based on total direct labor cost)
= Total Budgeted factory overheads / Total direct labor costs
= $ 1,450,040 / $ 464,420
= $ 3.1223 per dollar of direct labor cost (rounded off 4 decimals)
Therefore,
Applied factory overhead per unit of product "High F" is as follows:-
= $ 3.1223 x $ 18.90
= $ 59.0115
Therefore, correct answer is $ 59.01
