Which of the following statements concerning the unit product cost of Product W7 is true?
A)The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $244.36.
B)The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $66.13.
C)The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $66.13.
D)The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $244.36.

Question

Quizplus · Accepted Answer

In the table provided in the question, it can be seen that the unit product cost of Product W7 under traditional costing is $353.59 and under activity-based costing is $97.23. Therefore, the difference between the two costs is $353.59 - $97.23 = $256.36. Since the question specifically asks for the difference in the opposite direction (i.e. activity-based costing minus traditional costing), we need to subtract this amount from zero to get the correct answer. Thus, the unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $256.36, which is closest to option D ($244.36 is not a choice). Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $533,540 ÷ 5,800 DLHs = $91.99 per DLH (rounded)
Computation of traditional unit product cost: 11ea7998_5eb6_59bb_911b_312330a5635b_TB2627_00_TB2627_00 Computation of activity rates: 11ea7998_5eb6_59bc_911b_9d7d2f65cc4c_TB2627_00_TB2627_00 Computation of the overhead cost per unit under activity-based costing. 11ea7998_5eb6_80cd_911b_6bcf125407b4_TB2627_00_TB2627_00 Computation of unit product cost under activity-based costing. 11ea7998_5eb6_a7de_911b_9105078a27db_TB2627_00_TB2627_00 The difference in unit product costs is: 11ea7998_5eb6_a7df_911b_37f5e801f316_TB2627_00_TB2627_00 The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $244.36.
Reference: CH04-Ref22
Mckenny, Inc., manufactures and sells two products: Product P9 and Product X2.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: 11ea7998_5eb6_cef0_911b_0d721239e368_TB2627_00_TB2627_00 The direct labor rate is $28.20 per DLH.The direct materials cost per unit is $140.60 for Product P9 and $107.50 for Product X2.
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: 11ea7998_5eb6_f601_911b_8fada80854cd_TB2627_00_TB2627_00

Which of the Following Statements Concerning the Unit Product Cost