Answer:
Arntson, Inc.
The unit product cost of Product R3 under activity-based costing is closest to:
$778.81 per unit
Explanation:
a) Data and Calculations:
Annual production and sales:
Product R3 Product N0
Units 1,100 200
Direct Labor-Hours 1,100 200
Per Unit Total 8.0 4.0
Direct Labor-Hours 8,800 800
Total direct labor-hours 9,600
Direct labor rate is $24.10 per DLH.
Direct materials cost $285.00 $235.00
Estimated Expected Activity Cost Activity Measures Overhead Cost
Activity Pools
Overhead Cost Product R3 Product N0 Total
Labor-related DLHs $ 41,536 8,800 800 9,600
Production orders orders 56,010 1,200 200 1,400
Order size MHs 433,975 3,500 2,700 6,200
Total overhead costs $ 531,521
Activity rates: Product R3 Product N0
Labor-related DLHs $4.33 ($41,536/9,600) $38,104 $3,464
Production orders $40.00 ($56,010/1,400) 48,000 8,000
Order size MHs $70.00 ($433,975/6,200) 245,000 189,000
Total allocated overhead costs $331,104 $200,464
Product R3 Product N0
Units 1,100 200
Direct materials cost $285.00 $235.00 per unit
Total materials costs = $313,500 $47,000
Total direct labor costs 212,080 19,280
Total overhead costs 331,104 200,464
Total production costs $856,684 $266,744
Unit cost = $778.80 $1,333.72
