Question
Doeren, Inc., manufactures and sells two products: Product H2 and Product A8. Data concerning the expected production of each product and the expected total direct
Doeren, Inc., manufactures and sells two products: Product H2 and Product A8. 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 H2 200 7.0 1,400 Product A8 800 8.0 6,400 Total direct labor-hours 7,800 The direct labor rate is $15.10 per DLH. The direct materials cost per unit is $145.80 for Product H2 and $261.90 for Product A8. 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 H2 Product A8 Total Labor-related DLHs $ 83,148 1,400 6,400 7,800 Production orders orders 18,970 400 300 700 General factory MHs 817,191 5,000 5,100 10,100 $ 919,309 Which of the following statements concerning the unit product cost of Product A8 is true? (Round your intermediate calculations to 2 decimal places.) Select one: a. The unit product cost of Product A8 under traditional costing is greater than its unit product cost under activity-based costing by $331.64. b. The unit product cost of Product A8 under traditional costing is less than its unit product cost under activity-based costing by $331.64. c. The unit product cost of Product A8 under traditional costing is less than its unit product cost under activity-based costing by $1,540.33. d. The unit product cost of Product A8 under traditional costing is greater than its unit product cost under activity-based costing by $1,540.33.
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