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Hewett, Inc., manufactures and sells two products: Product E7 and Product U7. Data concerning the expected production of each product and the expected total direct
Hewett, Inc., manufactures and sells two products: Product E7 and Product U7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to output appear below Expected Direct Labor-Hours Per Total Direct Labor Product E7 Product U7 Total direct labor hours Unit 7.0 8.0 Hours 7,000 1600 8,600 1,000 200 The direct labor rate is $29.50 per DLH. The direct materials cost per unit is $164.10 for Product E7 and $289.50 for Product U7 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 E7 Product U7 Labor-related Production orders orders General factory $380,120 58,422 369,754 $808,296 Total 1,600 8,600 400 700 4,800 9,800 DLHs 7,000 300 5,000 MHs If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U7 would be closest to: $751.92 per unit O $667.68 per unit O $301.84 per unit O $353.60 per unit
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