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Large, Inc., manufactures and sells two products: Product G8 and Product 00. Historically, the firm has used a traditional costing system, with direct labor hours
Large, Inc., manufactures and sells two products: Product G8 and Product 00. Historically, the firm has used a traditional costing system, with direct labor hours as an activity base, to allocated manufaturing overhead to products. Data concerning the expected production of each product and the expected total direct labor-hours (DLHS) required to produce that output appear below: Product G8 Product 00 Total direct labor-hours Product G8 Product 00 Expected Production 840 440 The direct labor rate is $23.50 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $127.10 $127.50 Activity Cost Pools Labor-related Machine setups Order size Direct Labor- Hours Per The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Measures DLHS setups MHS Unit 6.4 3.4 Estimated Overhead Cost $ 62,555 61,390 372,508 $496,453 Total Direct Labor- Hours 5,376 1,496 6,872 Product G8 5,376 1,100 5,500 Product 00 1,496 670 6,500 Total 6,872 1,770 12,000 Which of the following statements concerning the unit product cost of Product G8 is true? (Round your intermediate calculations to 2 decimal places.)
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