Question

Mahaley, Inc., manufactures and sells two products: Product Q9 and Product F0. 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	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product Q9	960	9.6	9,216
Product F0	960	7.6	7,296
Total direct labor-hours			16,512

The direct labor rate is $23.40 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product Q9	$176.50
Product F0	$148.30

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 Cost Pools	Activity Measures	Overhead Cost		Product Q9	Product F0	Total
Labor-related	DLHs	$	395,680	9,216	7,296	16,512
Machine setups	setups		51,830	1,100	1,000	2,100
Order size	MHs		292,700	4,700	4,500	9,200
		$	740,210

The unit product cost of Product F0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

The unit product cost of Product F0 under activity-based costing is closest to:

	Product F0
Labor related [($395,680/16,512 DLHs) × 7,296 DLHs]	$174,835.35
Machine setups [($51,830/2,100 setpus) × 1,000 setups]	$24,680.96
Order Size [($292,700/9,200 Mhs) × 4,500 mhs]	$143,168.48
Total overhead cost	$342,684.79
÷
Units	960
Overhead cost per unit (A)	$356.96
Direct labor (7.6 DLHs per unit × $23.40) (B)	$177.84
Direct material (C)	$148.30
Unit product cost [A+B+C]	$683.10