Answer:
Lillich, Inc.
c. The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $5.63.
Explanation:
a) Data and Calculations:
Direct labor rate = $28.00 per DLH
                                          Product U6                      Product R5      Total
Expected production            690                                  1,060
Direct materials cost/unit   $250.40                             $167.80
Direct Labor Hours/unit         8.9                                     5.9 
Total direct labor hours        6,141                                 6,254        12,395
Direct labor costs               $171,948 ($28*6,141)          $175,112 ($28*6,254)
Total direct materials cost $172,776 ($250.4*690)   $177,868 ($167.8*1,060)
Total overhead                 $636,360                         $658,752                 $1,295,112
Total production cost        $981,084                         $1,011,732
Expected production            690                                  1,060
Cost per unit                      $1,421.86                         $954.46
Traditional costing:
Direct labor costs               $171,948 ($28*6,141)          $175,112 ($28*6,254)
Total direct materials cost $172,776 ($250.4*690)   $177,868 ($167.8*1,060)
Total overhead                   $641,612                          $653,418                 $1,295,112
Total production cost       $986,336                       $1,006,398
Expected production            690                                  1,060
Cost per unit                      $1,429.47                         $949.43
Allocation of overhead based on direct labor hours
= $ 1,295,086/12,395
= $104.48 per DLH
Product U6 = $641,612 ($104.48 *  6,141) 
Product R5 = $653,418 ($104.48 * 6,254)  
Estimated Expected Activity
Activity Cost Pools  Activity      Overhead  Product     Product   Total
                                Measures       Costs          U6           R5    
Labor-related           DLHs         $ 201,638    7,125        7,280     14,405
Production orders   Orders            72,840   1,350         1,250      2,600
Order size                MHs          1,020,608   6,500        6,800    13,300
Total                                        $ 1,295,086
Overhead rates:
Labor-related = $201,638/14,405 = $14.00 per DLH
Production orders = $72,840/2,600 = $28.00 per order
Order size = $1,020,608/13,300 = $76.74 per machine hour
Overhead allocation:
                                Product U6                      Product R5              Total
Labor-related         $99,750 (7,125*$14)       $101,920 (7,280*$14) $201,670
Production orders    37,800 (1,350*$28)         35,000 (1,250*$28)    72,800
Order size               498,810 (6,500*$76.74) 521,832 (6,800*$76.74) 1,020,642
Total overhead   $636,360                         $658,752                 $1,295,112