Kepple Manufacturing Currently Uses a Traditional Costing System

question 158

Multiple Choice

Kepple Manufacturing currently uses a traditional costing system. The company allocates overhead to its two products, Zips and Dees, using a predetermined manufacturing overhead rate based on direct labor hours. Here is data related to the company's two products: Information about the company's estimated manufacturing overhead for the year follows: Total estimated direct labor hours for the company for the year are 110,000 hours.
The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system. Additional information about production needed for the activity-based costing system follows: The amount of manufacturing overhead that would be allocated to one unit of Zips using the traditional costing system would be closest to

• A)$35.35.
• B)$23.57.
• C)$47.14.
• D)$32.86.

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Definitions:

Preventive Action

Steps taken to identify and eliminate potential issues before they occur to prevent future problems.

Benchmarking

Uses external comparisons to gain insights for planning.

Best Practices

Best practices refer to the most efficient and effective methods of operating or performing tasks, identified through experience and research, which serve as benchmarks for businesses or organizations.

Planning Technique

A systematic method or approach used in preparing and executing plans or strategies to achieve desired objectives.