Question

Faz, Inc., manufactures and sells two products: Product XO and Product W7. 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 LaborHours Per Unit	Total Direct Labor-Hours
Product x0	1,500	6	9,000
Product W7	590	3	1,770
Total direct labor-hours			10,770

The direct labor rate is $ 38.60 per DLH. The direct materials cost per unit is $ 163.50 for Product XO and $ 145 for Product W7.

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

The overhead applied to each unit of Product XO under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

• $ 253.33 per unit

• $ 317.68 per unit

• $ 85.08 per unit

• $ 238.58 per unit

Answer 1

Answer :

Given data :

Direct labour rate = $38.60 per DLH

Direct material cost = $163.50

labour related estimated overhead = 291078

Production orders = 20848

Order size = 258314

Now calculate overhead applied to each unit of production :

Labor related = (Production order / Total ) * Product x0

= (291078 / 10770 ) * 9000

= 27.02 * 9000

= $243240.6

Production orders = (20840 / 1580 ) * 690

= 13.18 * 690

= $ 9101.01

Order size = (258314 / 8480. ) * 4190

= 30.46 * 4190

= $ 127633.9

Total overhead = Labor related + Production orders + Order size

= $  243180 + $ 9094.2 + $ 127627.4

=$ 379975.5

Total units = 1000

Now ,

Unit cost =  Total overhead / Total units

= $ 379975.5 / 1500

= $ 253.33

   Unit cost = $ 253.33