Question

# The Homer Corporation produces two products, and reports the following production and cost information for the...

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

 Product A Product B Number of units produced 17,000 units 3,500 units Direct labor @ \$20 per direct labor hour (DLH) 0.50 DLH per unit 2.00 DLH per unit Direct materials cost \$ 2 per unit \$ 32 per unit
 Overhead costs: Total Cost Activity Driver Product A Product B Machine setup \$ 2,700.00 setups 5 setups 20 setups Quality inspections 43,800.00 inspections 80 inspections 170 inspections Total \$ 46,500.00

Using direct labor hours as the basis for assigning overhead costs, the total product cost per unit for Product B is:

Multiple Choice

\$12.00 per unit

\$13.50 per unit

\$72.00 per unit

\$78.00 per unit

\$14.00 per unit

Total Direct Labor Hours = (0.50 DLH per unit * 17,000 Units)+ (2.00 DLH per unit * 3,500 Units)

= 15,500 Direct Labor Hours

Direct Labor Cost = 2.00 DLH per unit * \$ 20 per direct labor hour * 3,500 Units

= \$ 140,000

Direct materials Cost = \$ 32 Per Unit * 3,500 Units

= \$ 112,000

Manufatcuring Overhead = \$ 46,500.00 / Total Direct Labor Hours * Total Direct Labor Hours of B

= \$ 46,500 / 15,500 Direct Labor Hours * 7,000Direct Labor Hours

= \$ 21,000

Total Product Cost = \$ 140,000+ \$ 112,000+\$ 21,000

= \$ 273,000

Total Product Cost Per Unit = Total Product Cost / Units

= \$ 273,000 / 3,500 Units

= \$ 78.00 Per Unit

Hence the correct answer is \$ 78.00 Per Unit

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