Question

Kroll, Inc., manufactures and sells two products: Product A4 and Product T6. 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 A4	800			7.0			5,600
Product T6	300			9.0			2,700
Total direct labor-hours							8,300

The direct labor rate is $21.50 per DLH. The direct materials cost per unit is $212.40 for Product A4 and $295.50 for Product T6.

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

Activity Cost Pools	Activity Measures	Estimated Overhead Cost			Expected Activity
					Product A4	Product T6	Total
Labor-related	DLHs	$	402,550		5,600	2,700	8,300
Production orders	orders		61,705		400	300	700
Order size	MHs		656,110		3,600	3,400	7,000
		$	1,120,365

The unit product cost of Product A4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_24_2018_QC_CS-119201

Multiple Choice

• $784.69 per unit

• $1,381.41 per unit

• $1,168.26 per unit

• $1,307.76 per unit

Answer 1

Correct Option C i.e. $1,168.26
Caluclation of ABC Unit product Cost
	Product A4	Product T6
Expected Production	800	300
Direct Material	169,920	88,650	(material per unit * productions Units)
Direct labour	120,400	58,050	(Labour hr per unit * labour hr required )
Overheads(See Note 1)	644,288	476,077
Total cost	934,608	622,777
Unit Product cost	1,168.26	2,075.92	(total cost/expected production)
Note 1:
				Product V9	Product M6
Activity	Total OH Cost	Total Cost Driver	OH Rate	Driver Incurred	OH Cost assigned	Driver Incurred	OH Cost assigned
LABOUR related product	402,550	8300	48.500	5600	271600.00	2700	130950.00
testing	61,705	700	88.150	400	35260.00	300	26445.00
order size	656,110	7000	93.730	3600	337428.00	3400	318682.00
Total	1,120,365				644288.00		476077.00