Question
Eliezrie, Inc., manufactures and sells two products: Product G8 and Product O0. Data concerning the expected production of each product and the expected total direct
Eliezrie, Inc., manufactures and sells two products: Product G8 and Product O0. 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 G8 | 750 | 5.5 | 4,125 |
Product O0 | 350 | 2.5 | 875 |
Total direct labor-hours | 5,000 | ||
The direct labor rate is $22.60 per DLH. The direct materials cost per unit for each product is given below:
Direct Materials Cost per Unit | |||
Product G8 | $118.10 | ||
Product O0 | $118.50 | ||
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated | Expected Activity | |||||
Activity Cost Pools | Activity Measures | Overhead Cost | Product G8 | Product O0 | Total | |
Labor-related | DLHs | $ | 58,055 | 4,125 | 875 | 5,000 |
Machine setups | setups | 56,890 | 650 | 625 | 1,275 | |
Order size | MHs | 368,008 | 5,050 | 5,600 | 10,650 | |
$ | 482,953 | |||||
Which of the following statements concerning the unit product cost of Product G8 is true? (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
-
The unit product cost of Product G8 under traditional costing is less than its unit product cost under activity-based costing by $196.09.
-
The unit product cost of Product G8 under traditional costing is less than its unit product cost under activity-based costing by $316.17.
-
The unit product cost of Product G8 under traditional costing is greater than its unit product cost under activity-based costing by $316.17.
-
The unit product cost of Product G8 under traditional costing is greater than its unit product cost under activity-based costing by $196.09.
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