Question

Aikman, Inc., manufactures and sells two products: Product 06 and Product 07. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Direct Labor Expected Hours Per Total Direct Production Unit Labor-Hours Product 06 200 9.0 1,800 Product 07 800 10.0 8,000 Total direct labor-hours 9,800 The direct labor rate is $17.50 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit Product 06 $206.50 Product 07 $162.30 The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Overhead Activity Cost Pools Activity Measures Cost Product 06 Product 07 Total Laborrelated DLHS $ 133,770 1.800 8.000 9,800 Production orders orders 18,501 400 300 700 Order size MHS 145.180 3.000 3,100 6.100 $ 297451 The unit product cost of Product 06 is closest to: (Round your intermediate calculations to 2 decimal places.) tempt=680585&cmid=565925

Answer 1

Calculation of Unit Product Cost of Product 06: Step 1: Calculation of total Manufacturing Overhead Costs assigned to Product 06: Labor Related $133770/9800 x 1800 = $ 24,570.00 Production Orders $18501/700 x 400 = $ 10,572.00 Order Size $145180/6100 x 3000 $ 71,400.00 So, total Manufacturing Overheads Assigned to Product 06 are Labor Related $ 24,570.00 Production Orders 10,572.00 Order Size $ 71,400.00 Total Manufacturing Overheads $ 106,542.00

Step 2: Calculation of Manufacturing Overhead Cost Per Unit for Product 06: $ Total Manufacturing Overhead Cost Number of Units 106,542.00 200 Manufacturing Overhead Cost Per Unit = $106,542/200 Units = $532.71 206.50 Step 3: Calculation of Unit Product Cost of Product 06: Direct Materials Cost Per Unit $ Direct Labor Cost Per Unit (9 hrs x $17.50) Manufacturing Overhead Cost Per Unit Unit Product Cost of Product 06 $ $ 157.50 $532.71 896.71 TA So, Option D is Correct Answer.