Question

Help Save & Exit Submit Fleurant, Inc., manufactures and sells two products Product W2 and Product PB. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below. Expected Direct Labor- Production Hours Per Unit 500 600 Production How Total Direct Labor-Hours 3,000 6 Product w2 Product P8 Total direct labor-hours 3,000 6,000 The direct labor rate is $44.10 per DLH. The direct materials cost per unit is $210.60 for Product W2 and $14730 for Product P8. The company is considering adopting an activity based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost Pools Labor-related Production orders Order size Estimated Activity Overhead Measures Cost DLHS $225, 576 orders 19,238 MHS 265,186 $510,000 Product W2 Product P8 3,000 3,000 550 450 3,950 3,750 Total 6,000 1,000 7,700 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product W2 would be closest to: Multiple Choice Brex 3 of 20 Next >

this is all of the information. there should be 2 photos.

Answer 1

Option (c) is correct

Total overhead cost is to be allocated based on direct labor hours.

Total overhead cost (given) = $510000

Total direct labor hours in product w2 and p8 are same for 6000  i.e. 3000 each. So, total overhead cost will be allocated equally between the two products.

Allocated overhead cost to product w2 = $510000 / 2 = $255000

Total units produced for product w2 (given) = 500

Per unit overhead rate = $255000 / 500 = $510 per unit.