Boswell Company Manufactures Two Products, Regular and Supreme Overhead Applied to Supreme Using Traditional Costing Using Direct Labor

question 6

Multiple Choice

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $\begin{array}{lrr}&\text { Regular}&\text { Supreme }\text { Direct labor hours } & 10,000 & 15,000 \\\text { Machine hours } & 10,000 & 30,000 \\\text { Number of parts } & 90,000 & 160,000\end{array}$ Overhead applied to Supreme using traditional costing using direct labor hours is

• A)$1,290,000.
• B)$1,800,000.
• C)$2,700,000.
• D)$3,210,000.

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Definitions:

Time-Driven Activity-Based Costing

A costing method that assigns costs to products or services based on the amount of resources they use, measured in time, enhancing cost accuracy and managerial decision-making.

Customer Cost Analysis

An evaluation process to determine the total cost associated with acquiring and maintaining a customer over time.

Customer Support Department

A specialized unit within a company that handles inquiries, complaints, and other interactions with customers to facilitate satisfaction and resolve issues.

Time-Driven Activity-Based Costing

An accounting method that assigns costs to products or services based on the actual time activities consume, improving accuracy in costing.