Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of labor while making a deluxe camping tent requires 10 hours of labor. During the most recent accounting period the company made 2,000 standard camping tents and 500 deluxe camping tents. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. Based on this information:
A. $16 of overhead cost should be assigned to each standard camping tent and $40 of overhead cost should be assigned to each deluxe tent.
B. $4 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
C. $20.80 of overhead cost should be allocated to each camping tent regardless of the type of tent made.
D. None of the answers are correct.
Answer: A
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