Bohringer,Inc. ,manufactures and sells two products: Product A1 and Product X5.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 $28.20 per DLH.The direct materials cost per unit is $256.50 for Product A1 and $165.20 for Product X5. The company has 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)$40.46 per DLH
B)$1,390.21 per DLH
C)$89.20 per DLH
D)$66.90 per DLH

Question

Bohringer,Inc. ,manufactures and sells two products: Product A1 and Product X5.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 $28.20 per DLH.The direct materials cost per unit is $256.50 for Product A1 and $165.20 for Product X5. The company has 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)$40.46 per DLH 
B)$1,390.21 per DLH 
C)$89.20 per DLH 
D)$66.90 per DLH

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $315,588 ÷ 7,800 DLHs = $40.46 per DLH