PaperPro Produces Two Models of Staplers-Executive and Basic Which of the Following Is Closest to the Overhead Rate

question 15

Multiple Choice

PaperPro produces two models of staplers-Executive and Basic. The annual production and sales of Executive and Basic are 800 and 500 units, respectively. The company has traditionally used direct labor hours to apply manufacturing overhead. Executive requires 0.3 labor hours per unit and Basic requires 0.2 labor hours per unit. The company has decided to utilize activity-based costing with three cost pools. Estimated costs for each pool are as follows: $\begin{array}{lrrrr}& \text { Estimated } \\\text { Activity } & \text { Overhead } &\text { Expected Activity }\\\text { Cost Pool } &\text { Costs }&\text { Executive }& \text { Basic } &\text { Total }\\\hline\text { Assembly } & \$ 24,025 & 450 & 420 & 870 \\\text { Packaging } & 16,880 & 2,000 & 750 & 2,750 \\\text { General Factory } & 32,014 & 120 & 150 & 270\\\text { Total }&\$72,919\end{array}$ Which of the following is closest to the overhead rate for assembly using activity-based costing?

• A) $81.81
• B) $53.39
• C) $57.20
• D) $27.61

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