Boahn,Inc. ,manufactures and sells two products: Product B6 and Product W8.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 W8 would be closest to:
A)$1,859.67 per unit
B)$356.67 per unit
C)$545.49 per unit
D)$456.30 per unit

Question

Boahn,Inc. ,manufactures and sells two products: Product B6 and Product W8.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 W8 would be closest to:
A)$1,859.67 per unit 
B)$356.67 per unit 
C)$545.49 per unit 
D)$456.30 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $475,248 ÷ 2,300 DLHs = $206.63 per DLH (rounded)
Product W8: 9.0 DLHs × $206.63 per DLH = $1,859.67

Boahn,Inc ,Manufactures and Sells Two Products: Product B6 and Product