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Upton Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct

Upton 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, Long and Short, about which it has provided the following data:

Long Short
Direct materials per unit $ 15.90 $ 47.60
Direct labor per unit $ 18.50 $ 52.10
Direct labor-hours per unit 0.80 2.40
Annual production 45,000 10,000

The company's estimated total manufacturing overhead for the year is $3,680,400 and the company's estimated total direct labor-hours for the year is 60,000.

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 Estimated Overhead Cost
Direct labor support (DLHs) $ 2,175,200
Setting up machines (setups) 463,200
Part administration (part types) 1,042,000
Total $ 3,680,400

Expected Activity
Long Short Total
DLHs 36,000 24,000 60,000
Setups 1,310 2,350 3,660
Part types 870 2,700 3,570

The unit product cost of product Long under the company's traditional costing system is closest to:

Multiple Choice

  • $87.01.

  • $34.40.

  • $63.40.

  • $83.47.

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