Frogge,Inc. ,manufactures and sells two products: Product H0 and Product N3.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 $23.60 per DLH.The direct materials cost per unit is $160.60 for Product H0 and $240.30 for Product N3. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$55.31 per DLH
B)$29.40 per DLH
C)$779.89 per DLH
D)$46.09 per DLH

Question

Frogge,Inc. ,manufactures and sells two products: Product H0 and Product N3.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 $23.60 per DLH.The direct materials cost per unit is $160.60 for Product H0 and $240.30 for Product N3. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$55.31 per DLH 
B)$29.40 per DLH 
C)$779.89 per DLH 
D)$46.09 per DLH

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $311,640 ÷ 10,600 DLHs = $29.40 per DLH