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Chrzan, Inc., manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct
Chrzan, Inc., manufactures and sells two products: Product EO and Product NO. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Product EO Product NO Total direct labor-hours Direct Total Expected Labor-Hours Direct Production Per Unit Labor-Hours 500 11.0 5,500 2,000 10.0 20,000 25,500 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost Pools Labor-related Production orders Order size Activity Measures DLHS orders MHS Estimated Overhead Cost $306,390 65,587 589,866 $961, 843 Product ED 5,500 1,300 6,000 Product NO 20,000 1,400 5,700 Total 25,500 2,700 11,700 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: Multiple Choice $24.29 per MH $50.42 per MH $37.72 per MH $15.32 per MH
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