Lamon,Inc. ,manufactures and sells two products: Product J9 and Product R6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the overhead assigned to each unit of Product J9 would be closest to:
A)$120.78 per unit
B)$302.49 per unit
C)$457.83 per unit
D)$772.56 per unit

Question

Lamon,Inc. ,manufactures and sells two products: Product J9 and Product R6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method,the overhead assigned to each unit of Product J9 would be closest to:
A)$120.78 per unit 
B)$302.49 per unit 
C)$457.83 per unit 
D)$772.56 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $457,860 ÷ 9,000 DLHs = $50.87 per DLH (rounded)
Product J9: 9.0 DLHs × $50.87 per DLH = $457.83

Lamon,Inc ,Manufactures and Sells Two Products: Product J9 and Product