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Woofter, Inc., manufactures and sells two products: Product Q7 and Product L4. Data concerning the expected production of each product and the expected total direct
Woofter, Inc., manufactures and sells two products: Product Q7 and Product L4. Data concerning the expected production of each product and the expected total direct labor- hours (DLHs) required to produce that output appear below: Expected Production 1,000 300 Direct Labor- Hours Per Unit 8.0 10.01 Total Direct Labor-Hours 8,000 3,000 Product Q7 Product L4 Total direct labor-hours 11,000 The direct labor rate is $25.60 per DLH. The direct materials cost per unit for each product is given below: Product Q7 Product L4 Direct Materials Cost per Unit $118.50 $263.30 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Measures Product Total L4 Activity Cost Pools Labor-related Product testing General factory DLHs Overhead Cost $393,360 43,923 645,348 $1,082,631 Product Q7 8,000 600 3,200 tests 3,000 11,000 500 5001 1100 1,100 3,400 6,600 MHS Which of the following statements concerning the unit product cost of Product L4 is true? O The unit product cost of Product L4 under traditional costing is less than its unit product cost under activity-based costing by $909.39. The unit product cost of Product L4 under traditional costing is greater than its unit product under activity-based costing by $548.12. The unit product cost of Product L4 under traditional costing is greater than its unit product under activity-based costing by $909.39. O The unit product cost of Product L4 under traditional costing is less than its unit product cost under activity-based costing by $548.12
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