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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 data: Direct materials per unit Slow $ 14.10 Fast $ 43.40 57 Direct labor per unit $ 3.20 $ 25.60 Direct labor-hours per unit Annual production 0.20 30,000 1.60 15,000 The company's estimated total manufacturing overhead for the year is $1,526,700 and the company's estimated total direct labor-hours for the year is 30,000. 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 (DLHS) Preparing batches (batches) Product support (product variations) Total Estimated Overhead Cost $ 720,000 362,700 444,000 DLHs Batches Product variations $ 1,526,700 Expected Activity Slow 6,000 1,380 570 Fast 24,000 Total 30,000 1,410 540 2,790 1,110 The manufacturing overhead that would be applied to a unit of product Fast under the activity-based costing system is closest to:
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