Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information given below.
Wall
Mirrors
Specialty
Windows
Units produced
25
25
Material moves per product line
5
15
Direct labor hours per unit
200
200
Budgeted materials handling costs
$50,000
Under a costing system that allocates overhead on the basis of direct labor hours, the materials handling costs allocated to one unit of wall mirrors would be:
a – $2,000
b – $5,000
c – $500
d – $1,000
CORRECT ANSWER IS C.
I got the question right but all I did was add the number of units 25 + 25 = 50 and divide that by the $50,000 handling costs. Becker gives this explanation:
Wall mirrors − 25 units × 200 hours per unit
5,000
hours
Specialty windows − 25 units × 200 hours per unit
5,000
hours
Total hours
10,000
hours
Budgeted materials handling costs
$50,000
Divided by total hours
÷ 10,000
Materials handling cost per hour
$5
Hours per unit
× 200
Costs allocated to one unit
$1,000
I changed the numbers around and got re did the problem though my method and then through Becker and I still get same answers.
MY QUESTION IS: is it save to say what I did was accurate?
BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS
.