[craw2488]

Here the problem:
After its facilities were automated, Flame Metal Works was able to reduce labor hours for Product A by 3,000 hours. Before automation, Product A consumed 8,000 labor hours. Product B was not affected by the automation and continued to consume 7,000 labor hours. Automation increased total overhead from $30,000 $36,000.

Which of the following choices would be true about the amount of overhead allocation if labor hours were used as the company-wide allocation base?
Product Before Automation After Automation
A $24,000 $15,000
B $14,000 $14,000
B $21,000 $14,000
A $16,000 $15,000
(I picked the last one with Before $16,000 and After $15,000?)

Which are the following statements is true concerning the amount of overhead allocation if the company continues to use direct labor hours as cost driver?
A. After automation, Product A is under costed
B. After automation, Product A is over costed.
C. After automation, Product B is over costed
D. Both a and c.
( I am unsure of this one, though should it be D.

Philip