Sanborn Industries Has the Following Overhead Costs and Cost Drivers

question 109

Multiple Choice

Sanborn Industries has the following overhead costs and cost drivers.Direct labor hours are estimated at 100,000 for the year. $\begin{array}{llrl}\text { Activity Cost Pool}&\text { Cost Driver }&\text {Est. Overhead }&\text {Cost Driver Activity }\\\text { Ordering and Receiving } & \text { Orders } & \$ 120,000 & 500 \text { orders } \\\text { Machine Setup } & \text { Setups } & 297,000 & 450 \text { setups } \\\text { Machining } & \text { Machine hours } & 1,500,000 & 125,000 \mathrm{MH} \\\text { Assembly } & \text { Parts } & 1,200,000 & 1,000,000 \text { parts } \\\text { Inspection } & \text { Inspections } & 300,000 & 500 \text { inspections }\end{array}$
- If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is

• A)$9.60.
• B)$12.00.
• C)$15.00.
• D)$34.17.

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