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

AZ-64409 Company

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

= $999.

Step-by-step 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