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:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product U6	620	8.2	5,084
Product R5	1,010	5.2	5,252
Total direct labor-hours			10,336

The direct labor rate is $27.30 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product U6	$249.10
Product R5	$166.50

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 U6	Product R5	Total
Labor-related	DLHs	$	195,138	5,084	5,252	10,336
Production orders	orders		66,340	700	600	1,300
Order size	MHs		1,014,108	5,200	5,500	10,700
		$	1,275,586

Which of the following statements concerning the unit product cost of Product U6 is true? (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $372.51.

• The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $372.51.

• The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $4.60.

• The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $4.60.

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