If the Company Allocates All of Its Overhead Based on Direct

question 47

Multiple Choice

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product X2 would be closest to:

• A)$132.60 per unit
• B)$1,837.85 per unit
• C)$376.90 per unit
• D)$461.40 per unit

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Definitions:

Gross Wages

The total amount earned by an employee before any deductions such as taxes or retirement contributions.

Regular Rate

The standard rate of pay for an employee's normal working hours, not including overtime or bonuses.

Warranty Expense

Costs associated with the obligation of a company to repair, replace, or compensate for defective goods sold to customers.

Warranty Liability

Warranty liability is an obligation that a company assumes when it promises to repair or replace defective products during a specified period, representing a potential future expense.