Question

Bia garden store makes two types of gazebo. Making a wooden gazebo requires 4 hours of labor while making a metal gazebo requires 10 hours of labor. During the most recent accounting period the company made 2,000 wooden gazebos and 500 metal gazebos. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information: OA. $4 of overhead cost should be allocated to each gazebo regardless of the type. OB. $20.80 of overhead cost should be allocated to each gazebo regardless of the type. O C.$16 of overhead cost should be assigned to each wooden gazebo and $40 of overhead cost should be assigned to each metal gazebo. None of the answers are correct.

Answer 1

Answer:

C.$16 of overhead cost should be assigned to each wooden gazebo and

   $40 of overhead cost should be assigned to each metal gazebo

Explanation:

2,000 wooden x 4 hours = 8,000 labor hours

500 metal x 10 = 5,000 labor hours

total hours 13,000

single manufacturing overhead: 52,000 / 13,000 = $4 per labor hours

wooden gazebos:  4hours x $4 = $ 16

metal gazebos:    10 hours x $4 = $40