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Lillich, Inc., manufactures and sells two products: Product U6 and Product R5. Data concerning the expected production of each product and the expected total direct
Lillich, Inc., manufactures and sells two products: Product U6 and Product R5. 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 630 Total Direct Labor- Hours 5,229 5,406 10,635 8.3 Product 16 Product R5 Total direct labor-hours 1,020 5.3 The direct labor rate is $27.40 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit $249.20 $166.60 Product 16 Product R5 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost Pools Labor-related Production orders Order size Activity Measures DLHS orders MHS Estimated Overhead Cost $ 195,638 66,840 1,014,608 $1,277,086 Product 16 5,229 750 5,300 Product R5 5 ,406 650 5,600 1486 Total 10,635 1,400 10,900 Photo Which of the following statements concerning the unit product cost of Product U6 is true? (Round your intermediate calculations to 2 decimal places.) Multiple Choice The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $369.28. O The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $369.28. The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $4.05. O The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $4.05
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