Question

Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. Data concerning the expected...

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.)

Homework Answers

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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