Serva,Inc. ,manufactures and sells two products: Product R4 and Product N4.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 $24.70 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 N4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$489.43 per unit
B)$451.00 per unit
C)$409.69 per unit
D)$425.26 per unit

Question

Serva,Inc. ,manufactures and sells two products: Product R4 and Product N4.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 $24.70 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 N4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$489.43 per unit 
B)$451.00 per unit 
C)$409.69 per unit 
D)$425.26 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $238,331 ÷ 5,700 DLHs = $41.81 per DLH (rounded)
Computation of traditional unit product cost:
 11eaa3fe_3364_676f_908b_c55ac436825a_TB2461_00

Serva,Inc ,Manufactures and Sells Two Products: Product R4 and Product