Louis Corporation,which Uses an Activity-Based Costing System,produces Travel Trailers and Boat

question 183

Multiple Choice

Louis Corporation,which uses an activity-based costing system,produces travel trailers and boat trailers.The company allocates batch setup costs to the two products using the following basic data: $$\begin{array} { | l | r | r | } \hline & \text { Travel trailers } & \text { Boat trailers } \\\hline \text { Budgeted urits to be produced } & 2,000 & 3,000 \\\hline \text { Budgeted number of setups } & 380 & 420 \\\hline \text { Budgeted number of direct labor hours per unit } & 20 & 10 \\\hline\end{array}$$ Total budgeted setup costs for the year are $140,000.
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If the setup costs are allocated using direct labor hours,how much of the total setup costs would be allocated to boat trailers?

• A)$ 60,000
• B)$ 105,000
• C)$ 140,000
• D)$ 326,667

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