Mellencamp,Inc. ,manufactures and sells two products: Product A3 and Product Y6.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 $24.20 per DLH.The direct materials cost per unit is $146.60 for Product A3 and $256.20 for Product Y6. 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 A3 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$632.44 per unit
B)$693.16 per unit
C)$815.00 per unit
D)$863.08 per unit

Question

Mellencamp,Inc. ,manufactures and sells two products: Product A3 and Product Y6.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 $24.20 per DLH.The direct materials cost per unit is $146.60 for Product A3 and $256.20 for Product Y6. 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 A3 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$632.44 per unit 
B)$693.16 per unit 
C)$815.00 per unit 
D)$863.08 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $993,450 ÷ 15,200 DLHs = $65.36 per DLH (rounded)
Computation of traditional unit product cost:
 11eaa3fe_3389_543f_908b_65f24bcb4e6b_TB2461_00