Masiclat,Inc. ,manufactures and sells two products: Product K2 and Product O8.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 $21.10 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 K2 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$1,038.84 per unit
B)$689.01 per unit
C)$859.29 per unit
D)$984.48 per unit

Question

Masiclat,Inc. ,manufactures and sells two products: Product K2 and Product O8.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 $21.10 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 K2 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$1,038.84 per unit 
B)$689.01 per unit 
C)$859.29 per unit 
D)$984.48 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $928,274 ÷ 12,900 DLHs = $71.96 per DLH (rounded)
Computation of traditional unit product cost:
 11eaa3fe_3366_6351_908b_afb7d1928943_TB2461_00