Question

A company manufactures and sells two products: Product A1 and Product C4. 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 A1	300	4.0	1,200
Product C4	600	2.0	1,200
Total direct labor-hours			2,400

The direct labor rate is $26.70 per DLH. The direct materials cost per unit is $202 for Product A1 and $264 for Product C4.

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 A1	Product C4	Total
Labor-related	DLHs	$	36,800	1,200	1,200	2,400
Production orders	orders		58,420	400	600	1,000
Order size	MHs		119,050	3,600	3,500	7,100
		$	214,270

The total cost per unit of Product C4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:
Overhead cost assigned to product C4        = Estimated Overhead Cost / Expected Activity        = ( $ 36,800 x 1,200 / 2,400 ) + ( $ 58,420 x 600 / 1,000 ) + ( $ 119,050 x 3,500 / 7,100)        =    $ 18,400 + $ 35,052 + $ 58,686.62        =    $ 112,138.62
Particulars	Amount (in $)
Direct material Cost per Unit	$ 264
Direct Labor Cost per Unit ( $ 26.70 x 2)	$ 53.4
Overhead Cost per Unit ( $ 112,138.62 / 600 )	$ 186.90
Total cost per unit of Product C4 under activity-based costing	$ 504.30