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:
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|
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R21V
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D00B
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|
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Direct materials per unit.................
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$19.60
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$61.70
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|
|
Direct labor per unit.......................
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$3.90
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$19.50
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|
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Direct labor-hours per unit.............
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0.30
|
1.50
|
|
|
Annual production.........................
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45,000
|
15,000
|
The company's estimated total manufacturing overhead for the year is $1,262,880 and the company's estimated total direct labor-hours for the year is 36,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
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Activities and Activity Measures
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Estimated Overhead Cost
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|
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Assembling products (DLHs)....................
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$ 108,000
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|
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Preparing batches (batches).......................
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362,880
|
|
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Product support (product variations).........
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792,000
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|
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Total...........................................................
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$1,262,880
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|
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Expected Activity
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|
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R21V
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D00B
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Total
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|
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DLHs........................
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13,500
|
22,500
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36,000
|
|
|
Batches.....................
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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