Question 17:

Cassidy Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, VIP and Kommander, about which it has provided the following data:

	VIP				Kommander
Direct materials per unit	$	27.50			$	62.10
Direct labor per unit	$	15.60			$	52.00
Direct labor-hours per unit		0.60				2.00
Annual production		40,400				15,400

The company's estimated total manufacturing overhead for the year is $2,670,096 and the company's estimated total direct labor-hours for the year is 55,040.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

Activities and Activity Measures	Estimated Overhead Cost
Assembling products (DLHs)		$	1,064,000
Preparing batches (batches)			420,496
Product support (product variations)			1,185,600
Total		$	2,670,096

	Expected Activity
	VIP		Kommander		Total
DLHs	24,240		30,800		55,040
Batches	1,498		1,066		2,564
Product variations	2,652		1,248		3,900

Unit overhead cost of Product Kommander under the activity-based costing system is closest to:

a) 123.98

b) 222.55

c) 198.63

d) 74.65