Question

can someone please help me with this managerial accounting problem i do not understand the process to find the answer?

Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. 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 400 Direct Labor-Hours Per Unit Product W2 Product P8 Total direct labor-hours Total Direct Labor-Hours 1.600 1,600 3, 2ee Bee The direct labor rate is $49.10 per DLH. The direct materials cost per unit is $215.60 for Product W2 and $152.30 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 Activity Measures DLHS orders MHS Estimated Overhead Cost $230,576 19,738 261,686 $512,000 Product W2 Product P8 1,600 1,600 600 500 4,000 3,800 Total 3,200 1,100 7,800 The overhead applied to each unit of Product W2 under activity based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Solution:

Computation of Activity rates
Activity Cost Pool	Total Cost	Total Activity	Activity rate
labor related	$2,30,576	3200	$72.06	per DLH
Production orders	$19,738	1100	$17.94	per order
order size	$2,61,686	7800	$33.55	per MH
Computation of Overhead allocated to Product W2 per unit
Activity Cost Pool	Activity rate		Activity usage by W2	Overhead assigned
labor related	$72.06	per DLH	1600	$1,15,296
Production orders	$17.94	per order	600	$10,764
order size	$33.55	per MH	4000	$1,34,200
Total Overhead allocated to Product W2				$2,60,260
Production units of W2				400
Total Overhead applied per unit to Product W2				$650.65

Hence second option is correct.