Pacchiana Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, R21V and D00B, about which it has provided the following data:
|
|
R21V
|
D00B
|
|
Direct materials per unit.................
|
$19.60
|
$61.70
|
|
Direct labor per unit.......................
|
$3.90
|
$19.50
|
|
Direct labor-hours per unit.............
|
0.30
|
1.50
|
|
Annual production.........................
|
45,000
|
15,000
|
The company's estimated total manufacturing overhead for the year is $1,262,880 and the company's estimated total direct labor-hours for the year is 36,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
|
Activities and Activity Measures
|
Estimated Overhead Cost
|
|
Assembling products (DLHs)....................
|
$ 108,000
|
|
Preparing batches (batches).......................
|
362,880
|
|
Product support (product variations).........
|
792,000
|
|
Total...........................................................
|
$1,262,880
|
|
|
Expected Activity
|
|
|
R21V
|
D00B
|
Total
|
|
DLHs........................
|
13,500
|
22,500
|
36,000
|
|
Batches.....................
|
1,440
|
1,152
|
2,592
|
|
Product variations.....
|
1,404
|
576
|
1,980
|
1. The unit product cost of product R21V under the company's traditional costing system is closest to:
A) $34.02
B) $24.40
C) $41.36
D) $23.50
2. The unit product cost of product D00B under the activity-based costing system is closest to:
A) $111.81
B) $133.82
C) $81.20
D) $30.61