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Cassidy Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct
Cassidy Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, VIP and Kommander, about which it has provided the following data: Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production VIP $ 27.50 $ 15.60 0.60 43,200 Kommander $ 62.10 $ 52.00 2.00 18, 200 The company's estimated total manufacturing overhead for the year is $4,483,488 and the company's estimated total direct labor-hours for the year is 62,320. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below: Activities and Activity Measures Assembling products (DLHS) Preparing batches (batches) Product support (product variations) Total Estimated Overhead Cost $2,310,000 599,808 1,573,680 $4,483,488 DLHS Batches Product Variations Expected Activity VIP Kommander Total 25,920 36,400 62,320 1,778 1,346 3,124 3,072 1,668 4,740 Unit overhead cost of Product Kommander under the activity-based costing system is closest to: $118.77. $354.07. $197.29. (0) $316.06
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