Leather Company makes two types of women's handbags. Making a standard handbag requires 2 hours of labor while making a deluxe handbag requires 5 hours of labor. During the next year, the company expects to make 2,000 standard handbags and 500 deluxe handbags. Indirect manufacturing costs are expected to be $52,000. Based on this information:
A. $8 of overhead cost should be allocated to each handbag of both types.
B. $20.80 of overhead cost should be allocated to each handbag of both types.
C. $16 of overhead cost should be assigned to each standard handbag and $40 of overhead cost should be assigned to each deluxe bag.
D. None of these
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