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Use the following information to answer Questions 1 and 2: A company manufactures two products: A and B. The company's accounting records revealed the following
Use the following information to answer Questions 1 and 2: A company manufactures two products: A and B. The company's accounting records revealed the following per-unit costs for direct materials and direct labor Product Product B Production volume (units) 4,000 5,000 Direct materials Direct labor: 2.5 hours at $10/hour 2 hours at $10/hour $40 $60 $25 $20 Management is considering a shift to activity-based costing and gathered the following manufacturing overhead data: Activity Cost Pool Setups General factory Machine processing Estimated Cost Estimate $240,000 $600,000 $120,000 Activity cost driver Number of setups Direct labor hours Machine hours Expected Activity Product Product B 80 40 10,000 10.000 1000 2,000 #1. Assuming that actual activity is the same as expected activity, what is the unit product cost of Product A under activity-based costing? a. $180 b. $205 c. $165 d. $200 e. None of the above Z. Suppose the company uses conventional job-order costing with a plantwide predetermined overhead rate and direct labor hours as the allocation base. Assuming that actual and expected direct labor hours are the same, what is the unit product cost of Product B under conventional job-order costing? 2. $176 . $180 $160 $161
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