Question

Layla has been allocating MOH costs to their three different products using a single plant-wide rate of $19 per DL hour. Their controller has suggested a switch to the following activity-based rates: $10 per production run, $15 per direct labor hour and $12 per inspection hour. If the most recent job required 5 production runs, 150 DL hours and 5 inspection hours, how much MOH would be allocated using the traditional costing method?

Answer 1

Using the traditional costing method, the MOH allocated to the most recent job would be $2,850.

Step-by-step explanation:

In the traditional costing method, the MOH cost is allocated using a single plant-wide rate of $19 per DL hour. To calculate the MOH cost for the most recent job, we need to multiply the DL hours of the job (150) by the plant-wide rate ($19).

MOH cost = DL hours * plant-wide rate = 150 * $19 = $2,850

Therefore, using the traditional costing method, the MOH allocated to the most recent job would be $2,850.