Lewis Company Manufactures Two Models of Pens-A Standard and a Deluxe

Lewis Company manufactures two models of pens-a standard and a deluxe model. Three activities have been identified as cost drivers and the related overhead costs ($60,000) pooled together to arrive at the following information: $$\begin{array} { l l l l } \text { Product } & \begin{array} { l } \text { Number of } \\\text { Setups }\end{array} & \begin{array} { l } \text { Number of } \\\text { Components }\end{array} & \begin{array} { l } \text { Number of } \\\text { DLH }\end{array} \\\text { Standard } & 22 & 8 & 375 \\\text { Deluxe } & 28 & 12 & 225 \\\text { Costs per pool } & \$ 15,000 & \$ 36,000 & \$ 9,000\end{array}$$ If activity- based costing is used, the cost assigned to the standard model using the number of direct labor hours would be:

A) $22,500
B) $37,500
C) $5,625
D) $3,375

Correct Answer:

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