Question

Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. 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 W2 | 600 | 6 | 3,600 |

Product P8 | 900 | 4 | 3,600 |

Total direct labor-hours | 7,200 | ||

The direct labor rate is $42.10 per DLH. The direct materials cost per unit is $208.60 for Product W2 and $145.30 for Product P8.

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 W2 | Product P8 | Total | |

Labor-related | DLHs | $ | 223,576 | 3,600 | 3,600 | 7,200 |

Production orders | orders | 19,038 | 530 | 430 | 960 | |

Order size | MHs | 333,386 | 3,930 | 3,730 | 7,660 | |

$ | 576,000 | |||||

The overhead applied to each unit of Product W2 under
activity-based costing is closest to: **(Round your
intermediate calculations to 2 decimal places.)**

Answer #1

OH cost per unit of Product W2 | |||||||

Activity | Estimated | Drivers | Activity | Driver used | Activity cost | ||

Overheads | rate | in W2 | alocated | ||||

Labour related | 2,23,576 | 7200 | 31.05 | 3600 | 111780 | ||

Production orders | 19,038 | 960 | 19.83 | 530 | 10509.9 | ||

Order size | 3,33,386 | 7660 | 43.52 | 3930 | 171033.6 | ||

Total Overheads allocated | 2,93,324 | ||||||

Divide: Units produced | 600 | ||||||

Oh cost per unit of W2 | 488.87 | ||||||

Answer is $ 488.87 per unit |

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Total Direct Labor-Hours
Product W2
300
6
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3
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Total
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2.0
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Total Direct Labor-Hours
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Total Direct Labor-Hours
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200
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