Question
A.Reitler, Inc., manufactures and sells two products: Product A2 and Product N7. Data concerning the expected production of each product and the expected total direct
A.Reitler, Inc., manufactures and sells two products: Product A2 and Product N7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
Expected Production
Direct Labor-Hours Per Unit
Total Direct Labor-Hours
Product A2
100
7.0
700
Product N7
800
9.0
7,200
Total direct labor-hours
7,900
The direct labor rate is $26.80 per DLH. The direct materials cost per unit for each product is given below:
Direct Materials Cost per Unit
Product A2
$151.60
Product N7
$205.00
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Activity Cost Pools
Activity Measures
Estimated Overhead Cost
Expected Activity
Product A2
Product N7
Total
Labor-related
DLHs
$
361,267
700
7,200
7,900
Product testing
Tests
49,777
300
400
700
Order size
MHs
263,736
4,500
4,300
8,800
$
674,780
QUESTION
5. Determine how much overhead would be assigned to each product under the activity-based costing system.
6. Determine the unit product cost of each product under the activity-based costing method.
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College Accounting Chapters 1- 15
Authors: James A Heintz, Robert W Parry
23rd Edition
1337794767, 9781337794763
