Question
Chhom, Incorporated, manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total
Chhom, Incorporated, manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product F9 Product U4 Total direct labor-hours Direct Labor- Total Direct Expected Hours Per Labor- Production Unit Hours 300 6.0 1,800 600 3.0 1,800 3,600 The direct labor rate is $27.80 per DLA. The direct materials cost per unit is $271.90 for Product F9 and $272.20 for Product U4. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost Pools Labor-related Production orders Order size Activity Measures Estimated Overhead Expected Activity Cost Product F9 Product U4 Total DLHS $ 38,988 orders MHS 61,910 126,150 1,800 400 3,800 1,800 3,600 600 1,000 3,700 7,500 $ 227,048
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