Cassano, Inc., manufactures and sells two products: Product C8 and Product E6. 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 $19.80 per DLH. The direct materials cost per unit is $145.10 for Product C8 and $181.00 for Product E6. The estimated total manufacturing overhead is $671,598. The unit product cost of Product C8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$658.94 per unit
B)$470.00 per unit
C)$666.56 per unit
D)$348.74 per unit

Question

Cassano, Inc., manufactures and sells two products: Product C8 and Product E6. 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 $19.80 per DLH. The direct materials cost per unit is $145.10 for Product C8 and $181.00 for Product E6. The estimated total manufacturing overhead is $671,598. The unit product cost of Product C8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$658.94 per unit 
B)$470.00 per unit 
C)$666.56 per unit 
D)$348.74 per unit

Quizplus · Accepted Answer

First, we need to calculate the predetermined overhead rate:

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total direct labor-hours
Predetermined overhead rate = $671,598 / 31,620 DLHs
Predetermined overhead rate = $21.25 per DLH

Next, we can calculate the total manufacturing cost per unit for Product C8:

Total manufacturing cost per unit = Direct materials cost per unit + Direct labor cost per unit + Manufacturing overhead cost per unit
Total manufacturing cost per unit = $145.10 + (11 DLHs x $19.80 per DLH) + (11 DLHs x $21.25 per DLH)
Total manufacturing cost per unit = $145.10 + $217.80 + $233.75
Total manufacturing cost per unit = $596.65

Therefore, the unit product cost of Product C8 under the company's traditional costing method is closest to $658.94 per unit (rounded to the nearest cent). Therefore, the best choice is A, and the explanation is as shown above.