Answer (A) is correct . If direct labor hours are used as the allocation base, the $50,000 of costs is allocated over 400 hours of direct labor. Multiplying the 25 units of each product times 200?hours results in 5,000 labor hours for each product, or a total of 10,000 hours. Dividing $50,000 by 10,000 hours results in a cost of $5 per direct labor hour. Multiplying 200 hours times $5 results in an allocation of $1,000 of overhead per unit of product.
Answer (B) is incorrect because The amount of $500 is the allocation based on number of material moves.
Answer (C) is incorrect because The amount of $2,000 assumes that all the overhead is allocated to the wall mirrors.
Answer (D) is incorrect because The amount of $5,000 assumes overhead of $250,000.
|
Under a costing system that allocates overhead on the basis of direct labor hours, Zeta Company’s materials handling costs allocated to one unit of wall mirrors would be
