Question

Snavely, Inc., manufactures and sells two products: Product E1 and Product A7. 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 E1	600	6.0	3,600
Product A7	400	3.0	1,200
Total direct labor-hours			4,800

The direct labor rate is $29.70 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product E1	$221.00
Product A7	$290.00

The company has 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 E1	Product A7	Total
Labor-related	DLHs	$	127,500	3,600	1,200	4,800
Machine setups	setups		60,110	700	400	1,100
Order size	MHs		940,160	4,000	3,100	7,100
		$	1,127,770

The total overhead applied to Product E1 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $1,127,785

• $663,551

• $796,812

• $529,680

Answer 1

Correct answer-----------$663,551

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	$ 127,500	4800	$             26.56	Per DLH
Production orders	Number of Order	$ 60,110	1100	$             54.65	Per Order
Order size	Number of MH	$ 940,160	7100	$          132.42	Per MH

.

Cost assigned to E1
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor related	$           26.56	3,600.00	$ 95,616
Production orders	$           54.65	700.00	$ 38,255
Order size	$        132.42	4,000.00	$ 529680
Total Overheads assigned			$ 663551