Based on same data given in Workout Problem 3: Recalling the…
Based on same data given in Workout Problem 3: Recalling the ABC (Activity-Based Costing) from his education at Mason, the company’s controller, Claire, proposed the use of a new costing system, ABC, for computing the costs of each product line. Its activity-based costing system uses two indirect-cost pools. One cost pool is for setup costs (which is $145,800 in total) and the other for general manufacturing overhead (which is also $145,800 in total). It allocates setup costs to the two lamps based on setup labor-hours and general manufacturing overhead costs on the basis of direct manufacturing labor-hours. The budgeted cost information is as follows: Basic Lamps Designer Lamps Total Direct materials per lamp $ 5 $ 21 Direct manufacturing labor per lamp 0.5 hours 0.8 hours Direct manufacturing labor rate per hour $ 30 $ 30 Setup costs $145,800 Lamps produced per batch 210 34 Setup labor-hours per batch 1 hour 2 hours General manufacturing overhead costs $145,800 When using the activity-based costing system, compute the general manufacturing overhead cost allocation rate Answer: $ per direct manufacturing labor-hour