Answered step by step
Verified Expert Solution
Question
1 Approved Answer
7. Warder, Inc., manufactures and sells two products: Product B9 and Product W2. The company uses a traditional costing system that allocates overhead based on
7. Warder, Inc., manufactures and sells two products: Product B9 and Product W2. The company uses a traditional costing system that allocates overhead based on direct labor hours. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Production 700 400 ExpectedDirect Labor-Hours Per Unit 6.0 4.0 Total Direct Labor-Hours 4.200 Product B9 Product W2 Total direct labor-hours 5,800 The direct labor rate is $20.50 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit S105.40 $181.30 Product B9 Product W2 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Labor-related Production orders Orders General factory Activity Cost Pools Activity Measures Overhead Cost Product B9Product W2 Total 1,600 5,800 400 700 5,100 10,000 $109,794 43,680 741,900 $895.374 DLHs 4,200 300 4,900 MHs Which of the following statements concerning the unit product cost of Product B9 is true? (Choose the closest answer.) A. The unit product cost of Product B9 under traditional costing is less than its unit product cost under activity-based costing by $266.57 B. The unit product cost of Product B9 under traditional costing is greater than its unit product under activity-based costing by S308.74 C. The unit product cost of Product B9 under traditional costing is less than its unit product cost under activity-based costing by $308.74 D. The unit product cost of Product B9 under traditional costing is greater than its unit product under activity-based costing by S266.57
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started