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Lefave, Inc., manufactures and sells two products: Product Q1 and Product D5. Data concerning the expected production of each product and the expected total direct
Lefave, Inc., manufactures and sells two products: Product Q1 and Product D5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Direct Labor-Hours Per Unit Expected Production 1,800 800 Total Direct Labor- Hours 10,440 2,240 12,680 Product Q1 Product D5 5.8 2.8 Total direct labor-hours 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 Activity Cost Pools Labor-related Product testing Order size Estimated Overhead Cost $160,482 56,909 212,825 $430,216 Product Q1 10,440 800 4,600 Product D5 2, 240 700 4,500 Total 12,680 1,500 9,100 tests MHS If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to: Multiple Choice $12.66 per DLH O $33.93 per DLH O $37.94 per DLH $23.39 per DLH
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