Vittoria Corporation Manufactures Two Products-Carts and Wheelbarrows

question 49

Multiple Choice

Vittoria Corporation manufactures two products-Carts and Wheelbarrows.The annual production and sales of Carts is 2,000 units,while 1,800 units of Wheelbarrows are produced and sold.The company has traditionally used direct labour hours to allocate its overhead to products.Carts require 1.0 direct labour hours per unit,while Wheelbarrows require 0.5 direct labour hours per unit.The total estimated overhead for the period is $117,500.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)$40.52 per direct labour hour.
• B)$130.56 per direct labour hour.
• C)$58.75 per direct labour hour.
• D)$30.92 per direct labour hour.

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