Great Outdoors Company Makes Two Types of Camping Tents

question 5

Multiple Choice

Great Outdoors Company makes two types of camping tents.Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor.During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents.Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours.Based on this information:

• A) $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
• B) $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
• C) $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent.
• D) None of the answers are correct.

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