Question

35) 33) Arnison, Inc., manaferors and sells two products Product 3 and ProdNO. The a l production and sales of Product or is 200 units and of Pret NO 100 units Data concerning the expected production of each product and the expected to direct inber-hours (DEN) required to produce that outpupper below: Diner Labor-Hours Perlu 80 11.0 Totul Direct Labor-Ho Expected Production 200 100 Product R3 Product NO Total direct labor-hours 1.600 1.100 2.700 The direct labor rate is $15.30 per DLH. The direct materials cost per unit is $287.80 for Product R3 and $104.80 for Product NO. The company is considering adopting an activity-based costing system with the followin activity cost pools, activity measures, and expected activity: Activity Cast Pools Activity Measures Labor-related DLHS Production orders orders Order size MHS Estimated Expected Activity Overhead Cost Product R3 Product NO Total $ 39,636 1,600 1.100 2.700 57,421 600 700 1,300 432,075 3.900 7,500 529,132 3,600 The unit product cost of Product R3 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.) A) $2,177.97 per unit B) $1,451.18 per unit C) $1.701.13 per unit D) $1,981.96 per unit

Answer 1

Answer : C) $1701.13 per unit

Calculated as

Calculation of unit product cost of R
			Rate
Direct Material	200	units	287.8	$    57,560.00
Direct Labor	1600	Hours	15.8	$          25,280
Overhead	Calculated as below			$        257,386
Total Production cost of R3				$        340,226
Units Produced				200
Per Unit Product cost of R3		=340226/200		$      1,701.13	Per unit
Calculation of overhead rate on ABC basis
	Estimated Overhead	=/	Total Activity	=	overhead rate
-Labor Related	39636	=/	2700	=	$               14.68
-Production orders	57421	=/	1300	=	$               44.17
-Order size	432075	=/	7500	=	$               57.61
Calculation of overhead for R3
	Activity for R3	x	Rate	=	overhead
-Labor Related	1600	x	14.68	=	$            23,488
-Production orders	600	x	44.17	=	$            26,502
-Order size	3600	x	57.61	=	$          207,396
Total					$          257,386

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