Question

Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. 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 F9	500	2.0	1,000
Product U4	200	1.0	200
Total direct labor-hours			1,200

The direct labor rate is $27.40 per DLH. The direct materials cost per unit is $281 for Product F9 and $267 for Product U4.

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 F9	Product U4	Total
Labor-related	DLHs	$	39,000	1,000	200	1,200
Production orders	orders		61,930	200	200	400
Order size	MHs		126,190	3,300	4,000	7,300
		$	227,120

The overhead applied to each unit of Product U4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer- The overhead applied to each unit of Product U4 under activity-based costing is closest to =$533.13 per unit.

Explanation- overhead applied to each unit of Product U4 = Total overhead applied to Product U4/ No. of units of Product U4

= $106626/200 units

= $533.13 per unit

Where- Total overhead applied to Product H9 = Labor related+ Production orders+ Order size

= ($32.50 per hour*200 hours)+ ($154.83 per order*200 orders)+ ($17.29 per machine hour*4000 hours)

= $6500+$30966+$69160

= $106626