Bates Company makes two products. Product X requires 6,000 hours of labor, and Product Y requires 4,000
Question:
Bates Company makes two products. Product X requires 6,000 hours of labor, and Product Y requires 4,000 hours of labor. Bates undertook an automation program that reduced the consumption of labor required by Product X to only 2,000 hours of labor. Product Y was not affected by the automation process. Overhead cost prior to the automation totaled $10,000. After automation, overhead cost amounted to $24,000. Assuming Bates uses direct labor hours as a company-wide allocation base before and after the automation, the amount of overhead cost allocated to:
Multiple Choice
a-product X would be $4,000 prior to automation and $16,000 after automation.
b-product X would be $6,000 prior to automation and $16,000 after automation.
c-product Y would be $8,000 prior to automation and $8,000 after automation.
d-product Y would be $4,000 prior to automation and $16,000 after automation.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer