Question
Faz Inc manufactures and sells two products: Product X0 and Product W7. Data concerning the expected production of each product and the expected total direct
Faz Inc manufactures and sells two products: Product X0 and Product W7. 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 X0 | 1000 | 5 | 5,000 |
Product W7 | 520 | 3 | 1,560 |
Total direct labor-hours | 6,560 |
The direct labor rate is $31.60 per DLH. The direct materials cost per unit is $156.50 for Product X0 and $138 for Product W7.
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 | Product X0 | Product W7 | Total |
Labor-related | DLHs | $284,078 | 5,000 | 1,560 | 6,560 |
Production orders | Orders | $20,148 | 620 | 820 | 1,440 |
Order size | MHs | $247,094 | 4,120 | 4,220 | 8,340 |
$551,320 |
The overhead applied to each of Product X0 under Activity-based costing is closest to:
A: $350.36 per unit
B: $420.21 per unit
C: $347.25 per unit
D: $122.08 per unit
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