Answer:
Option D is correct
Under costed by $53.76
Explanation:
Using activity based costing, the job would be costed using the different cost driver rates as provided in the question.
Overheads allocated= (12× 22) + (32×3)= 360
Using traditional costing system, the overhead would be charged using direct labor hours only.
Total overheads = (100,000 × 12) + (6000 × 32) =1,392,000
Predetermined overhead absorption rate
= 1,392,000/100,000 labour hours
=$13.92 per hour
Allocated overheads= OAR × labour hours required
= $13.92 × 22 =306.24
Using traditional costing, the job would be under costed by
= 360 - 306.24
=$53.76