Vintage Fun Reproduces Old-Fashioned Style Roller Skates and Skateboards

question 51

Multiple Choice

Vintage Fun reproduces old-fashioned style roller skates and skateboards. The annual production and sales of roller skates is 950 units, while 1,750 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 2.5 direct labor hours per unit, while skateboards require 1.25 direct labor hours per unit. The total estimated overhead for the period is $114,300. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: The predetermined overhead allocation rate using the traditional costing system would be closest to

• A)$52.25 per direct labor hour.
• B)$48.13 per direct labor hour.
• C)$42.33 per direct labor hour.
• D)$25.05 per direct labor hour.

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Definitions:

Paper Money

Currency made from paper that is officially issued by a government and circulated within its economy.

Wade-Davis Bill

Radical Republicans’ 1864 plan for Reconstruction that required loyalty oaths, abolition of slavery, repudiation of war debts, and denial of political rights to high-ranking Confederate officials; President Lincoln refused to sign the bill.

Loyalty Oath

An oath or pledge affirming one's allegiance to a state or nation, often required by governments of its employees or members of its military forces.

Radical Republicans

A faction within the U.S. Republican Party during and after the Civil War that advocated for the complete abolition of slavery and harsh reconstruction policies for the Southern states.