Sam Company Makes Metal Signs for Businesses and Residences The Amount of Support Costs Assigned to a Small Sign

Multiple Choice

Sam Company makes metal signs for businesses and residences.These signs are made of sheet metal, which the owner paints by hand.The owner has a good sense of his labor and materials cost behavior, but he is concerned that he does not have good measure of other support costs.Currently, he predicts support costs to be 40% of the cost of materials.Close investigation of the business reveals that $8 per direct labor hour is a more plausible and reliable support cost relationship. Consider estimated support costs of the following two signs that Sam Company makes. $\begin{array}{llr}&\text { Small Sign } & \text { Large Sign } \\\text { Materials cost } & \$ 150 & \$ 500 \\\text { Direct labor hours } & 5 & 7 \\\text { Support costs } & 9 & 11\end{array}$ The amount of support costs assigned to a small sign using direct labor hours as the cost driver is _____.

A) $80
B) $40
C) $200
D) $90