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Hanna, Inc. uses activity-based costing. The company produces X and Y. Information relating to the two products is as follows: X Y Units produced 19,000 25,000 Machine-hours 7,500 8,500 Direct labor-hours 8,000 12,000 Materials handling (number of moves) 4,000 6,000 Setups 5,000 7,000 The following costs are reported: Materials handling $160,000 Labor-related overhead 280,000 Setups 240,000 Labor-related overhead costs assigned to product X are: Select one:

A. $224,000
B. $232,000
C. $192,000
D. $112,000

Respuesta :

Answer:

D. $112,000

Explanation:

The computation of the labor related overhead cost assigned to product X  is shown below:

But before that, first we have to determine the direct labor hour per unit which is shown below:

Direct labor hours per unit is

= Labor related overhead ÷ Total Direct labor hours

= $280,000 ÷ 20,000 direct labor hours

= $14

Now the labor cost overhead cost assigned is

= 8,000 × $14

= $112,000

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