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Kudzu Company Sells Two Products Big X and Little X

question 69

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Kudzu Company sells two products Big X and Little X. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $525,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 16,000 units of Big X and 18,000 units of Little X next year.
 Direct  Direct  Material  Labor Dollars  Per Unit  Per Unit  Big X $5$20 Little X $3$10\begin{array}{|c|c|c|}\hline & \text { Direct } & \text { Direct } \\& \text { Material } & \text { Labor Dollars } \\&\text { Per Unit } & \text { Per Unit } \\\hline \text { Big X } & \$ 5 & \$ 20 \\\hline \text { Little X } & \$ 3 & \$ 10 \\\hline\end{array}
-Kudzu has 34,000 total estimated direct labor hours for next year.
Direct labor hours per unit of Big X = $20/$20 = 1 DLH
Direct labor hours per unit of Little X = $10/$20 = .5 DLH
Estimated direct labor hours = (1 x 16,000) + (.5 x 18,000) = 25,000 direct labor hours

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Definitions:

Abstract Concept

An idea or thought that is intangible and not based directly on physical reality, requiring a level of thinking and understanding beyond concrete objects.

Dissimilar

Different in nature or quality; not alike or similar.

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Behavior Research

The study of actions and reactions of individuals and groups in various contexts, typically to understand the underlying mechanisms of behavior.

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