Question

Faz, Inc., manufactures and sells two products: Product X0 and Product W7. 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 X0	1,500	4	6,000
Product W7	420	2	840
Total direct labor-hours			6,840

The direct labor rate is $21.60 per DLH. The direct materials cost per unit is $146.50 for Product X0 and $128 for Product W7.

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 X0	Product W7	Total
Labor-related	DLHs	$	274,078	6,000	840	6,840
Production orders	orders		19,148	520	720	1,240
Order size	MHs		238,134	4,020	4,120	8,140
		$	531,360

The overhead applied to each unit of Product X0 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $310.74 per unit

• $249.04 per unit

• $78.39 per unit

• $244.02 per unit

Answer 1

calculate overhead to each unit

	Product X0
Labor related	274078/6840*6000 = 240419
Production orders	19148/1240*520 = 8030
Order size	238134/8140*4020 = 117604
Total	366053
Unit	1500
Overhead cost per unit	244.02

So answer is d) $244.02 per unit