The prices, direct material cost (DM), shipping cost and DLHs below are given for one unit of the product. Product Price DM DLHs Units Hourly Wage-DL Shipping Cost HiEnd $200 $72 2 5000 $20 $3 LoEnd $150 $44 1 6000 $20 $1 LoEnd HiEnd Total $360,000 40 120 160 8,000 12,000 20,000 300,000 ? 144,000 5 200,000 4 A. $ 5.00 per unit. B. $ 5.00 per unit. C. $ 8.00 per unit. D. $ 8.00 per unit. E. The company collected the data for ABC as follows: Rapp Company is considering switching to an activity-based costing (ABC) system. The company produces and sells two products: LoEnd and HiEnd. The company consists of two departments: Production (where the products are made) and Marketing (which engages in selling and admin activity). The company's traditional costing system computes unit product costs as dictated by GAAP; direct labor hours (DLHs) are used as the allocation base for manufacturing overhead cost (the overhead rate is rounded to the nearest cent). The ABC system will include in unit costs all costs easily associated with units. In addition, in the ABC system, there are four major indirect activities: Machine Setups, Special Processing, General Factory, and Customer Relation (10% of Customer Relation cost relates to manufacturing and is incurred in the Production Department; the rest of the Customer Relation cost is incurred in the Marketing Department). In the ABC system, Customer Relation costs will be associated with customers; the rest of the costs will be associated with units of the two products. Activity Cost Pool Activity Measure Estimated OH cost Activity measures used Under the traditional costing system, the HiEnd unit cost is higher by Machine Setup # of setups Special Processing Machine hours General Factory (excluding Customer Relation) DLHs Customer Relation # of customers What is the difference between the HiEnd product's unit costs computed by the traditional and ABC systems? Under the traditional costing system, the HiEnd unit cost is higher by Under the traditional costing system, the HiEnd unit cost is lower by Under the traditional costing system, the HiEnd unit cost is lower by None of the above

What is the difference between the HiEnd product's unit costs computed by the traditional and ABC systems?

The company collected the data for ABC as follows:

Rapp Company is considering switching to an activity-based costing (ABC) system. The company produces and sells two

products: LoEnd and HiEnd. The company consists of two departments: Production (where the products are made) and Marketing

(which engages in selling and admin activity). The company's traditional costing system computes unit product costs as dictated

by GAAP; direct labor hours (DLHs) are used as the allocation base for manufacturing overhead cost (the overhead rate is

rounded to the nearest cent). The ABC system will include in unit costs all costs easily associated with units. In addition, in the

ABC system, there are four major indirect activities: Machine Setups, Special Processing, General Factory, and Customer Relation

(10% of Customer Relation cost relates to manufacturing and is incurred in the Production Department; the rest of the Customer

Relation cost is incurred in the Marketing Department). In the ABC system, Customer Relation costs will be associated with

customers; the rest of the costs will be associated with units of the two products.

Activity Cost Pool Activity Measure

Estimated

OH cost

Activity measures used

Under the traditional costing system, the HiEnd unit cost is higher by

Machine Setup # of setups

Special Processing Machine hours

General Factory (excluding Customer

Relation) DLHs

Customer Relation # of customers

What is the difference between the HiEnd product's unit costs computed by the traditional and ABC systems?

Under the traditional costing system, the HiEnd unit cost is higher by

Under the traditional costing system, the HiEnd unit cost is lower by

A. $ 5.00 per unit.

B. $ 5.00 per unit.

C. $ 8.00 per unit.

D. $ 8.00 per unit.

E.

Under the traditional costing system, the HiEnd unit cost is lower by