Kepple Manufacturing Currently Uses a Traditional Costing System Information About the Company's Estimated Manufacturing Overhead for the Year

Multiple Choice

Kepple Manufacturing currently uses a traditional costing system.The company allocates overhead to its two products,Zips and Dees,using a predetermined manufacturing overhead rate based on direct labor hours.Here is data related to the company's two products: $\begin{array}{|l|r|r|}\hline &\text { Zips } & \text { Dees } \\\hline \text { Direct materials per unit } & \$ 140.00 & \$ 100.00 \\\hline \text { Direct labor per unit } & \$ 55.00 & \$ 50.00 \\\hline \text { Direct labor hours per unit } & 2.0 & 1.5 \\\hline \text { Annual production } & 25,000 &40,000 \\\hline\end{array}$
Information about the company's estimated manufacturing overhead for the year follows:
$\begin{array}{|l|l|l|}\hline&&\text { Estimated }\\\text { Activities } & \text { Activity measures } & \text { overhead cost }\\\hline \text { Supervision and maintenance } & \text { Direct labor hours } & \$ 2,200,000 \\\hline \text { Batch costs } & \text { Number of batches } & \$ 212,500 \\\hline \text { Engineering changes } & \text { Number of engineering hours } & \$ 180,000\\\hline\end{array}$

$\text { Total estimated manufacturing overhead for the year } \quad \quad \quad \quad\quad \$ 2.592 .500$
Total estimated direct labor hours for the company for the year are 110,000 hours.
The company is evaluating whether it should use an activity-based costing system in place of its traditional costing system.Additional information about production needed for the activity-based costing system follows:
$\begin{array} { | l | r | r | r | } \hline && { \text { Expected activity } } \\\hline &{ \text { Zips } } & { \text { Dees } } &{ \text { Total } } \\\hline \text { Direct labor hours } & 50,000 & 60,000 & 110,000 \\\hline \text { Setups } & 2,000 & 500 & 2,500 \\\hline \text { Part types } & 1,800 & 1,200 & 3,000 \\\hline\end{array}$
- The amount of manufacturing overhead that would be allocated to one unit of Zips using an activity-based costing system would be closest to:

A) $ 32.86.
B) $ 51.12.
C) $ 64.81.
D) $ 11.95.