National Inc

question 54

Multiple Choice

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:
What is the overhead application rate using the firm's volume-based costing system (rounded to the nearest percent or cents) ?

• A)350 percent of direct labor cost.
• B)$51.89 per direct labor-hour.
• C)68 per cent of direct labor cost.
• D)5,189 percent of direct labor cost.
• E)5,110 percent of direct labor cost.

---

Definitions:

Goods Sold

This term refers to the merchandise that has been purchased by consumers, indicating sales transactions that have been completed during a certain period.

Product Cost

The total expense incurred in manufacturing a product, including direct labor, direct materials, and overhead costs.

Period Cost

A type of expense that is not directly tied to the production of inventory and is instead associated with a specific time period, such as sales and administrative expenses.

Managerial Situation

A managerial situation involves the context and conditions under which managers make decisions, handle operations, and solve problems within an organization.