Question

Mahaley, Inc., manufactures and sells two products: Product Q9 and Product F0. 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 Q9	820	8.2	6,724
Product F0	820	6.2	5,084
Total direct labor-hours			11,808

The direct labor rate is $22.00 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product Q9	$175.10
Product F0	$146.90

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 Q9	Product F0	Total
Labor-related	DLHs	$	381,680	6,724	5,084	11,808
Machine setups	setups		44,830	400	300	700
Order size	MHs		285,700	3,300	3,100	6,400
		$	712,210

The unit product cost of Product F0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_22_2018_QC_CS-119201

Multiple Choice

• $748.07 per unit

• $675.87 per unit

• $355.50 per unit

• $539.47 per unit

Answer 1

Determine the Activity rate for each activty pool Activity rate= Cost pool/ Total Cost pool total Activty Activity Labor Related 381680 11808 32.32 Machine Setup 44830 700 64.04 order Size 285700 6400 44.64 Activity rate=Cost pool/ Activity Product FO OH allocated Activity Rate Activity = Activy *rate Labor Related 32.32 5084 164315 Machine Setup 64.04 300 19212 order Size 44.64 138384 Total Overhead cost Allocatd 321911 Overhead cost Per Unit = 321911/820 392.57 Direct Labor (22*6.2) 136.40 Direct Material 146.90 ANSWER: Unit Prodcut Cost = $675.87Per Unit 675.87 31001