Reference: 17_01
Kudzu Company Sells Two Products Big X and Little

True/False

Reference: 17_01
Kudzu Company sells two products Big X and Little X. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $525,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 16,000 units of Big X and 18,000 units of Little X next year.
$\begin{array}{|c|c|c|}\hline & \begin{array}{l}\text { Direct } \\\text { Material } \\\text { per Unit }\end{array} & \begin{array}{c}\text { Direct } \\\text { Labor Dollars } \\\text { per Unit }\end{array} \\\hline \operatorname{Big} X & \$5 & \$ 20 \\\hline \text { Little X } &\$3 & \$ 10 \\\hline\end{array}$

-If the direct labor time estimates are met,Kudzu will allocate $10.50 of overhead cost to each unit of Little X.