Question

AZ-64409 company makes and sells two products: Product W903 and Product Z653. The annual production and sales of Product W903 is 600 units and of Product Z653 is 600 units. 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 W903 600 10.0 6,000 Product Z653 600 5.0 3,000 Total direct labor-hours 9,000 The direct labor rate is $27.00 per DLH. The direct materials cost per unit is $227.00 for Product W903 and $283.00 for Product Z653. The AZ-64409 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 W903 Product Z653 Total Labor-related DLHs $ 40,936 6,000 3,000 9,000 Production orders orders 58,660 700 600 1,300 Order size MHs 433,375 3,800 3,000 6,800 $ 532,971 The unit product cost of Product W903 under activity-based costing is closest to:

Answer 1

Answer:

AZ-64409 Company

The unit product cost of Product W903 under activity-based costing is closest to:

= $999.

Explanation:

a) Data and Calculations:

                                           Product W903   Product Z653

Annual production and sales     600                       600

Direct labor-hours per unit            10.0                        5.0

Total direct-labor hours           6,000                    3,000            9,000

Direct labor rate                     $27.00 per DLH   $27.00 per DLH

Direct labor costs per unit    $270.00                 $135.00

Direct materials cost per unit 227.00                   283.00

Estimated       Expected Activity    Activity Cost Pools    Activity Measures Overhead Cost                             Product W903 Product Z653 Total

Labor-related DLHs       $ 40,936    6,000               3,000          9,000

Production orders orders 58,660       700                  600           1,300

Order size MHs               433,375    3,800               3,000          6,800

                                     $ 532,971

Activity Rates                                          Product W903 Product Z653

Labor-related costs $4.55 per DLH               27,300           $13,650

Production orders   $45.12 per order             31,584            27,072

Order size               $63.73 per MH              242,174            191,190

Total costs assigned                                   $301,058         $231,912

Overhead cost per unit                                 $501.76         $386.52

                                                Product W903       Product Z653

Direct labor costs per unit          $270.00                 $135.00

Direct materials cost per unit       227.00                   283.00

Overhead cost per unit                502.00                   387.00

Total cost per unit                      $999.00                $805.00