Question

Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2,200 units, while 1,500 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $149,115. The company is looking at the possibility of changing to an activity-based costing system for its products.===The overhead cost per Blenders using the traditional costing system would be closest toA) $28.86.B) $38.48.C) $99.41.D) $21.55.

Answer 1

$35.085

Not in options.

Step-by-step explanation:

As for the provided information,

Details of Production are:

Toasters = 2,200 units

Blenders = 1,500 units

Hours required for each unit are:

Toasters = 1.25

Blenders = 1

Now, therefore, total hours of direct labor

Toasters = 2,200
`*` 1.25 = 2,750

Blenders = 1,500
`*` 1 = 1,500

Total hours = 4,250

Thus, total overheads = $149,115

Rate per hour = $149,115/4,250 = 35.085

Based on the information given the answer is $35.085, although this is not in the option.

Therefore, options provided are incorrect.