Which of the following statements concerning the unit product cost of Product X4 is true?
A)The unit product cost of Product X4 under traditional costing is less than its unit product cost under activity-based costing by $189.12.
B)The unit product cost of Product X4 under traditional costing is less than its unit product cost under activity-based costing by $2.79.
C)The unit product cost of Product X4 under traditional costing is greater than its unit product under activity-based costing by $189.12.
D)The unit product cost of Product X4 under traditional costing is greater than its unit product under activity-based costing by $2.79.

Question

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $1,059,155 ÷ 16,800 DLHs = $63.04 per DLH (rounded)
Computation of traditional unit product cost: 11ea7998_5eb1_779f_911b_173eef3526fe_TB2627_00_TB2627_00 Computation of activity rates: 11ea7998_5eb1_9eb0_911b_c1d59c8db468_TB2627_00_TB2627_00 Computation of the overhead cost per unit under activity-based costing. 11ea7998_5eb1_c5c1_911b_77d03345c624_TB2627_00_TB2627_00 Computation of unit product cost under activity-based costing. 11ea7998_5eb1_ecd2_911b_73276ac7c77b_TB2627_00_TB2627_00 The difference in unit product costs is: 11ea7998_5eb1_ecd3_911b_1fe696d353e7_TB2627_00_TB2627_00 The unit product cost of Product X4 under traditional costing is greater than its unit product under activity-based costing by $2.79.
Reference: CH04-Ref18
Teehan, Inc., manufactures and sells two products: Product U2 and Product W5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: 11ea7998_5eb2_13e4_911b_9995dd1fa2cf_TB2627_00_TB2627_00 The direct labor rate is $20.40 per DLH.The direct materials cost per unit for each product is given below: 11ea7998_5eb2_13e5_911b_95fb9f6d1974_TB2627_00_TB2627_00 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: 11ea7998_5eb2_3af6_911b_bf41d070fd02_TB2627_00_TB2627_00

Which of the Following Statements Concerning the Unit Product Cost