Question

Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. 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 F9	300	6.0	1,800
Product U4	600	3.0	1,800
Total direct labor-hours			3,600

The direct labor rate is $27.80 per DLH. The direct materials cost per unit is $271.90 for Product F9 and $272.20 for Product U4.

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 F9	Product U4	Total
Labor-related	DLHs	$	38,988	1,800	1,800	3,600
Production orders	orders		61,910	400	600	1,000
Order size	MHs		126,150	3,800	3,700	7,500
		$	227,048

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U4 would be closest to: (Round your intermediate calculations to 2 decimal places.)

rev: 03_24_2018_QC_CS-119201

Multiple Choice

• $185.73 per unit

• $189.21 per unit

• $32.49 per unit

• $50.46 per unit

Answer 1

Predetermined Overhead rate = Estimated overhead / Estimated total labor hours

= 227,048 / 3600 = 63.07

Total Overhead allocated to product U4 = 63.07*1800 = 113,526

Per unit allocation = 113,526/600

= 189.21

Option B :D