Question

Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product F9	100	2.0	200
Product U4	200	1.0	200
Total direct labor-hours			400

The direct labor rate is $29.70 per DLH. The direct materials cost per unit is $263 for Product F9 and $266 for Product U4.

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product F9	Product U4	Total
Labor-related	DLHs	$	48,000	200	200	400
Production orders	orders		76,200	200	200	400
Order size	MHs		155,280	3,200	2,700	5,900
		$	279,480

The overhead applied to each unit of Product U4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Correct answer--------------$665.82

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Labor related	Number of DLH	$ 48,000	400	$          120.00	Per DLH
Production orders	Number of order	$ 76,200	400	$          190.50	Per order
Order size	Number of MH	$ 155,280	5900	$             26.32	Per MH

.

Cost assigned to Product U4
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor related	$        120.00	200.00	$ 24,000.00
Production orders	$        190.50	200.00	$ 38,100.00
Order size	$           26.32	2,700.00	$ 71,064.00
Total Overheads assigned			$       133,164.00
Production			200.00
Overhead cost per unit			$ 665.82