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	1,100	2.0	2,200
Product A7	300	1.0	300
Total direct labor-hours			2,500

The direct labor rate is $21.10 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product E1	$229.00
Product A7	$220.00

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	$	137,300	2,200	300	2,500
Machine setups	setups		64,730	1,200	300	1,500
Order size	MHs		1,012,420	2,800	3,700	6,500
		$	1,214,450

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

• $1,214,465

• $608,732

• $523,169

• $436,128

Answer 1

Correct answer-----------$608,732

Working

Calculation of Activity rates
Activity Cost Pool	Activity driver	Overhead Cost (A)	Expected Activity (B)	Activity rate (A/B)
Labor-related	Number of DLHs	$ 137,300	2500	$             54.92	Per DLH
Machine setups	Number of setup	$ 64,730	1500	$             43.15	Per setup
Order size	Number of MHs	$ 1,012,420	6500	$          155.76	Per MH

.

Cost assigned to Product E1
Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Labor-related	$           54.92	2,200.00	$ 120824.00
Machine setups	$           43.15	1,200.00	$ 51,780.00
Order size	$        155.76	2,800.00	$ 436128.00
Total Overheads assigned			$           608,732.00