Pachero,Inc. ,manufactures and sells two products: Product T1 and Product U6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: he direct labor rate is $15.90 per DLH.The direct materials cost per unit is $259.80 for Product T1 and $188.80 for Product U6. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$180.23 per DLH
B)$25.51 per DLH
C)$435.80 per DLH
D)$135.17 per DLH

Question

Pachero,Inc. ,manufactures and sells two products: Product T1 and Product U6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:  he direct labor rate is $15.90 per DLH.The direct materials cost per unit is $259.80 for Product T1 and $188.80 for Product U6. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$180.23 per DLH 
B)$25.51 per DLH 
C)$435.80 per DLH 
D)$135.17 per DLH

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $71,428 ÷ 2,800 DLHs = $25.51 per DLH