Extracts from Cost Information of Hebar Corp Which of the Following Statement Is True of Hebar's Setup

question 123

Multiple Choice

Extracts from cost information of Hebar Corp.: $\begin{array}{|l|l|l|l|}\hline& \text { Simple L3 } & \\&\text { Pack } & \text { Complex L7 Pack } & \text { Total }\\\hline \text { Setup cost allocated using direct labor-hours } & \$ 18,750 & \$ 6,250 & \$ 25,000 \\\hline \text { Setup cost allocated using setup-hours } & \$ 13,200 & \$ 11,800 & \$ 25,000\\\hline\end{array}$ Which of the following statement is true of Hebar's setup costs under traditional costing?

• A) L3 pack is undercosted by $5,550
• B) L7 pack is undercosted by $5,450
• C) L3 pack is overcosted by $5,550
• D) L7 pack is overcosted by $5,550

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