Betenbaugh,Inc. ,manufactures and sells two products: Product E4 and Product L8.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 $29.00 per DLH.The direct materials cost per unit is $223.90 for Product E4 and $122.30 for Product L8. 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 L8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$437.60 per unit
B)$785.30 per unit
C)$1,893.02 per unit
D)$510.92 per unit

Question

Betenbaugh,Inc. ,manufactures and sells two products: Product E4 and Product L8.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 $29.00 per DLH.The direct materials cost per unit is $223.90 for Product E4 and $122.30 for Product L8. 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 L8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$437.60 per unit 
B)$785.30 per unit 
C)$1,893.02 per unit 
D)$510.92 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $824,979 ÷ 3,100 DLHs = $266.12 per DLH (rounded)
Computation of traditional unit product cost:
 11eaa3fe_3385_5c89_908b_51456c97bb2c_TB2461_00