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