Which of the following statements concerning the unit product cost of Product F4 is true?
A)The unit product cost of Product F4 under traditional costing is less than its unit product cost under activity-based costing by $170.19.
B)The unit product cost of Product F4 under traditional costing is greater than its unit product under activity-based costing by $342.00.
C)The unit product cost of Product F4 under traditional costing is greater than its unit product under activity-based costing by $170.19.
D)The unit product cost of Product F4 under traditional costing is less than its unit product cost under activity-based costing by $342.00.

Question

Quizplus · Accepted Answer

According to the table given in the question, the unit product cost of Product F4 under traditional costing is $902.00 and its unit product cost under activity-based costing is $1,072.19. Therefore, the difference between the two is $170.19 and the unit product cost of Product F4 under traditional costing is greater than its unit product under activity-based costing by this amount. Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $505,711 ÷ 9,000 DLHs = $56.19 per DLH (rounded)
Computation of traditional unit product cost: 11ea7998_5eae_6a4d_911b_bd32e18ea674_TB2627_00_TB2627_00 Computation of activity rates: 11ea7998_5eae_915e_911b_8d0fa7ffb2a0_TB2627_00_TB2627_00 Computation of the overhead cost per unit under activity-based costing. 11ea7998_5eae_b86f_911b_a581058c3ff5_TB2627_00_TB2627_00 Computation of unit product cost under activity-based costing. 11ea7998_5eae_df80_911b_3fd3c57d65f1_TB2627_00_TB2627_00 The difference in unit product costs is: 11ea7998_5eae_df81_911b_2ddd0e6af99e_TB2627_00_TB2627_00 The unit product cost of Product F4 under traditional costing is greater than its unit product under activity-based costing by $170.19.
Reference: CH04-Ref16
Treaster, Inc., manufactures and sells two products: Product J8 and Product G2.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: 11ea7998_5eae_df82_911b_9167c8c09168_TB2627_00_TB2627_00 The direct labor rate is $26.90 per DLH.The direct materials cost per unit is $217.20 for Product J8 and $139.60 for Product G2.
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: 11ea7998_5eaf_0693_911b_7b0d9027d815_TB2627_00_TB2627_00

Which of the Following Statements Concerning the Unit Product Cost