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 900 9.0 8,100 Product F0 900 7.0 6,300 Total direct labor-hours 14,400 The direct labor rate is $22.80 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit Product Q9 $175.90 Product F0 $147.70 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 $ 389,680 8,100 6,300 14,400 Machine setups setups 48,830 800 700 1,500 Order size MHs 289,700 4,100 3,900 8,000 $ 728,210 The unit product cost of Product F0 under activity-based costing is closest to: (Round your intermediate calculations to 2 deci

Mahaley, Inc., manufactures and sells two products: Product 09 and Product Fo. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below. Direct Total Labor- Direct Expected Hours Per Labor- Production Unit Hours Product 09 900 9.0 8,100 Product FD 900 7.0 6,300 Total direct labor-hours 14,400 The direct labor rate is $22.80 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $175.90 $147.70 Product 09 Product FO The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools Labor-related Machine setups Order size Estimated Expected Activity Activity Overhead Measures Cost Product 09 Product FDTotal DLHS $389,680 B, 100 6,300 14,400 setups 48,830 800 1,500 MHS 289,700 4,100 3,900 8,00D $729,210 The unit product cost of Product FO under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice 0 $752.75 per unit O $678.95 per unit O $381.10 per unit 0 $519.35 per unit

Answer 1

Solution:

Allocation of overhead and computation of overhead cost per unit
Activity cost pool	Estimated Overhead Cost	Total Expected Activity	Activity Rate	Product F0
				Expected use of Drivers	Cost Assigned
Labor Related	$3,89,680	14400	$27.06	6300	$1,70,478
Machine Setup	$48,830	1500	$32.55	700	$22,785
Order size	$2,89,700	8000	$36.21	3900	$1,41,219
Total Overhead assigned					$3,34,482
Nos of units of production					900
Overhead cost per unit					$371.65

Computation of Unit Product Cost
	Product F0
		Direct Materials	$147.70
Direct labor (7*$22.80)	$159.60
Overhead	$371.65
Unit Product cost of Product F0	$678.95

Hence, second option is correct.