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Russell Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on
Russell 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, Slow and Fast, about which it has provided the following date: Slow Fast Direct materials per unit Direct labor per unit Direct labor-hours per unit Annual production $ 14.10 $ 43.40 $ 3.20 $ 25.60 8.20 50,000 1.60 35,000 The company's estimated total manufacturing overhead for the year is $3,149,700 and the company's estimated total direct labor-hours for the year is 66,000. 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 Assembling products (OLHS) Preparing batches (batches) Product support (product variations) Total Estimated Overhead Cost $1,700,000 502,600 947,100 $3,149,700 Expected Activity DLHS Slow 10,000 Fast Total 56,000 66,000 Batches 1,780 1,818 3,590 Product variations 1,170 1,140 2,310 The manufacturing overhead that would be applied to a unit of product Fast under the activity-based costing system is closest to: Multiple Choice $77.42. $11.62 $61.91. $139.23.
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