Question

A company manufactures and sells two products: Product A1 and Product C4. 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 A1	100	2.0	200
Product C4	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 A1 and $266 for Product C4.

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 A1	Product C4	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 total cost per unit of Product C4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $961.52 per unit

• $1,057.70 per unit

• $676.70 per unit

• $994.40 per unit

Answer 1

				Product C4
Cost pool	Estimated overhead	Activity driver	Activity rate	Activity driver incurred	OH assigned
	A	B	C=A/B	D	E= D*C
Labor	48,000	400	120.00	200	24,000
Production	76,200	400	190.50	200	38,100
order	155,280	5,900	26.32	2,700	71,064
Total overhead applied	279,480				133,164
Production					200
OH cost per unit					665.82
Material and labor					295.7
Cost per unit					961.52

Answer is:961.52

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