QUESTION 8

1. Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. 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 W2	400	5	2,000
   Product P8	500	4	2,000
   Total direct labor-hours			4,000

   The direct labor rate is $37.10 per DLH. The direct materials cost per unit is $203.60 for Product W2 and $140.30 for Product P8.

   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 W2	Product P8	Total
   Labor-related	DLHs	$	218,576	2,000	2,000	4,000
   Production orders	orders		18,538	400	380	780
   Order size	MHs		202,886	3,880	3,680	7,560
   		$	440,000

   Which of the following statements concerning the unit product cost of Product W2 is true? (Round your intermediate calculations to 2 decimal places.)

   	A.	The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $220.00.
   	B.	The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $7.32.
   	C.	The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $220.00.
   	D.	The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $7.32