Weiskopf, Inc., manufactures and sells two products: Product E6 and Product J2.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 $18.10 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: Which of the following statements concerning the unit product cost of Product J2 is true?
A)The unit product cost of Product J2 under traditional costing is less than its unit product cost under activity-based costing by $101.07.
B)The unit product cost of Product J2 under traditional costing is greater than its unit product under activity-based costing by $101.07.
C)The unit product cost of Product J2 under traditional costing is greater than its unit product under activity-based costing by $42.54.
D)The unit product cost of Product J2 under traditional costing is less than its unit product cost under activity-based costing by $42.54.

Question

Weiskopf, Inc., manufactures and sells two products: Product E6 and Product J2.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 $18.10 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:  Which of the following statements concerning the unit product cost of Product J2 is true?
A)The unit product cost of Product J2 under traditional costing is less than its unit product cost under activity-based costing by $101.07. 
B)The unit product cost of Product J2 under traditional costing is greater than its unit product under activity-based costing by $101.07. 
C)The unit product cost of Product J2 under traditional costing is greater than its unit product under activity-based costing by $42.54. 
D)The unit product cost of Product J2 under traditional costing is less than its unit product cost under activity-based costing by $42.54.

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $977,362 ÷ 9,300 DLHs = $105.09 per DLH (rounded)
Computation of traditional unit product cost: 11ea7998_5e9b_30f8_911b_d9758ae11d74_TB2627_00_TB2627_00 Computation of activity rates: 11ea7998_5e9b_30f9_911b_710c509af655_TB2627_00_TB2627_00 Computation of the overhead cost per unit under activity-based costing. 11ea7998_5e9b_580a_911b_fdd46eec218b_TB2627_00_TB2627_00 Computation of unit product cost under activity-based costing. 11ea7998_5e9b_580b_911b_fd774cb0a04b_TB2627_00_TB2627_00 The difference in unit product costs is: 11ea7998_5e9b_580c_911b_09c0956411ac_TB2627_00_TB2627_00 The unit product cost of Product J2 under traditional costing is greater than its unit product under activity-based costing by $101.07.