Sampaga, Inc., manufactures and sells two products: Product S6 and Product U3. 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 $20.90 per DLH. The direct materials cost per unit is $145.30 for Product S6 and $221.50 for Product U3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Which of the following statements concerning the unit product cost of Product U3 is true?
A)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $93.97.
B)The unit product cost of Product U3 under traditional costing is less than its unit product cost under activity-based costing by $93.97.
C)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $463.26.

Question

Sampaga, Inc., manufactures and sells two products: Product S6 and Product U3. 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 $20.90 per DLH. The direct materials cost per unit is $145.30 for Product S6 and $221.50 for Product U3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  Which of the following statements concerning the unit product cost of Product U3 is true?
A)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $93.97. 
B)The unit product cost of Product U3 under traditional costing is less than its unit product cost under activity-based costing by $93.97. 
C)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $463.26.

Quizplus · Accepted Answer

The Answer of Sampaga, Inc., manufactures and sells two products: Product S6 and Product U3. 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 $20.90 per DLH. The direct materials cost per unit is $145.30 for Product S6 and $221.50 for Product U3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  Which of the following statements concerning the unit product cost of Product U3 is true?
A)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $93.97. 
B)The unit product cost of Product U3 under traditional costing is less than its unit product cost under activity-based costing by $93.97. 
C)The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $463.26.