Poo Inc. manufactures two models of CMD that can be used as cell phones, MPX,...
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Accounting
Poo Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.
Model
Annual Sales in Units
High F
10,000
Great P
16,000
National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:
High F
Great P
Direct materials
$38.00
$25.40
Direct labor
$17.52
$13.14
Budget factory overhead
Engineering and Design
2,409
engineering hours
$404,712
Quality Control
12,848
inspection hours
$269,808
Machinery
33,726
machine hours
$539,616
Miscellaneous Overhead
26,400
direct labor hours
$134,904
Total
$1,349,040
National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:
High F
Great P
Engineering and design hours
969
1,440
Quality control inspection hours
5,648
7,200
Machine hours
20,286
13,440
Labor hours
12,000
14,400
What is the overhead application rate using the firm's volume-based costing system (rounded to the nearest percent or cents)? It is expressed as a percent of direct labor cost.
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