Asked by Asive Sibeko on May 11, 2024
Verified
Busto, Inc., manufactures and sells two products: Product P8 and Product Z6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: 
The direct labor rate is $20.30 per DLH.The direct materials cost per unit for each product is given below: 
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: 
The unit product cost of Product Z6 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A) $340.55 per unit
B) $647.60 per unit
C) $466.05 per unit
D) $350.40 per unit
Activity-Based Costing
A method of costing that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.
- Compare and contrast traditional costing and ABC for product costing.
- Figure out the cost per individual unit via traditional and activity-based costing methods.
Verified Answer
PJ
Punnapat JirasarunpatMay 18, 2024
Final Answer :
B
Explanation :
Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $700,953 ÷ 8,000 DLHs = $87.62 per DLH (rounded)
Computation of traditional unit product cost:
= $700,953 ÷ 8,000 DLHs = $87.62 per DLH (rounded)
Computation of traditional unit product cost:
Learning Objectives
- Compare and contrast traditional costing and ABC for product costing.
- Figure out the cost per individual unit via traditional and activity-based costing methods.