Morris Company Allocates Overhead Based on Direct Labor Hours

question 13

Multiple Choice

Morris Company allocates overhead based on direct labor hours.It allocates overhead costs of $12,800 to two different jobs as follows: Job 1: (10 hours) = $6,400; Job 2: (10 hours) = $6,400
The production process for Job 2 was then automated.Now Job 2 requires only two hours of direct labor but four hours of mechanical processing.As a result,total overhead increases to $17,000.With the change in the production process for Job 2,the amount of overhead assigned to:

• A) each product will increase.
• B) Job 1 will decrease.
• C) each product will decrease.
• D) Job 1 will increase.

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