Mission Company Is Preparing Its Annual Profit Plan -
Under a Traditional Costing System That Allocates Overhead on of Its

Mission Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below. (CMA based)
$$\begin{array} { | l | r | r | } \hline & \text { Wall Mirrors } & \text { Specialty Windows } \\\hline \text { Units Produced } & 40 & 20 \\\hline \text { Material moves per product line } & 5 & 15 \\\hline \text { Direct labor hours per product line } & 200 & 300 \\\hline \text { Budgeted material handling costs: } \$ 50,000 & \\\hline\end{array}$$
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Under a traditional costing system that allocates overhead on the basis of direct labor hours, the materials handling costs allocated to one unit of Specialty Windows would be:

A) $1,500.
B) $500.
C) $2,000.
D) $5,000.

Correct Answer:

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