Question

Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:

                               Number of                 Number of                     Number of

Product                          Setups              Components         Direct Labor Hours

Standard                               12                                8                                 255

Deluxe                                  28                              12                                 245

Overhead costs              $52,000                      $78,000

3) 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?

A) $65,700

B) $63,600

C) $66,300

D) $66,700

4) 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 deluxe model?

A) $64,300

B) $63,700

C) $63,300

D) $63,600

5) Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?

A) $49,200

B) $45,600

C) $46,800

D) $47,400

6) Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?

A) $84,400

B) $83,200

C) $82,600

D) $80,800

Answer 1

			Overhead Costs		$52,000
					$78,000
			Total Overhead Costs		$130,000
			Standard		Deluxe
3	Direct Labor hours	255/500*130000		245/500*130000
			66300		63700
	Qns -3-		Option C $ 66300
	Qns-4-		Option b $ 63700
			Standard		Deluxe
Set up			12/40*52000		28/40*52000
Set up			15600		36400
Components		8/20*78000		12/20*78000
			31200		46800
total cost			46800		83200
	Qns 5		Option C $ 46800
	Qns 6		Option B $ 83200