Addison Company Manufactures Two Products, Regular and Supreme - Overhead Applied to Supreme Using Traditional Costing Using Direct

question 8

Multiple Choice

Addison Company manufactures two products, Regular and Supreme.Addison's overhead costs consist of machining, $2,500,000; and assembling, $1,250,000.Information on the two products is: $$\begin{array} { l c c } & \text { Regular } & \text { Supreme } \\\text { Direct labor hours } & 10,000 & 15,000 \\\text { Machine hours } & 10,000 & 30,000 \\\text { Number of parts } & 90,000 & 160,000\end{array}$$
- Overhead applied to Supreme using traditional costing using direct labor hours is

• A)$1,075,000.
• B)$1,500,000.
• C)$2,250,000.
• D)$2,675,000.

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Definitions:

Limiting Reactant

The limiting reactant is the substance in a chemical reaction that is completely consumed first, thereby determining the maximum amount of product that can be formed.

Wax

A diverse class of organic compounds that are malleable at slightly higher temperatures than room temperature and mainly consist of hydrocarbons.

Theoretical Yield

The maximum amount of product that could be formed from given amounts of reactants in a chemical reaction, assuming no losses.

Carbon Dioxide

This is a gas that has no color or odor, generated through the combustion of carbon-based substances and the respiratory process, and is consumed by plants for photosynthesis.