Question

Faz, Inc., manufactures and sells two products: Product X0 and Product W7. 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 X0	2,000	5	10,000
Product W7	500	2	1,000
Total direct labor-hours			11,000

The direct labor rate is $29.60 per DLH. The direct materials cost per unit is $154.50 for Product X0 and $136 for Product W7.

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 X0	Product W7	Total
Labor-related	DLHs	$	282,078	10,000	1,000	11,000
Production orders	orders		19,948	600	800	1,400
Order size	MHs		243,974	4,100	4,200	8,300
		$	546,000

Which of the following statements concerning the unit product cost of Product W7 is true? (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• The unit product cost of Product W7 under traditional costing is greater than its unit product cost under activity-based costing by $221.68.

• The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $77.22.

• The unit product cost of Product W7 under traditional costing is greater than its unit product cost under activity-based costing by $77.22.

• The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $221.68.

Answer 1