Abbe,Inc. ,manufactures and sells two products: Product O9 and Product A3.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $24.40 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: The unit product cost of Product O9 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$544.48 per unit
B)$759.76 per unit
C)$660.48 per unit
D)$926.24 per unit

Question

Abbe,Inc. ,manufactures and sells two products: Product O9 and Product A3.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  The direct labor rate is $24.40 per DLH.The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  The unit product cost of Product O9 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$544.48 per unit 
B)$759.76 per unit 
C)$660.48 per unit 
D)$926.24 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $774,344 ÷ 11,500 DLHs = $67.33 per DLH (rounded)
Computation of traditional unit product cost:
 11eaa3fe_334d_0e56_908b_07695e6573dd_TB2461_00

Abbe,Inc ,Manufactures and Sells Two Products: Product O9 and Product