Serva,Inc. ,manufactures and sells two products: Product R4 and Product N4.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 $24.70 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: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$72.50 per DLH
B)$238.33 per DLH
C)$15.23 per DLH
D)$48.33 per DLH

Question

Serva,Inc. ,manufactures and sells two products: Product R4 and Product N4.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 $24.70 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:  The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:
A)$72.50 per DLH 
B)$238.33 per DLH 
C)$15.23 per DLH 
D)$48.33 per DLH

Quizplus · Accepted Answer

Activity rate = Estimated overhead cost ÷ Total expected activity
= $86,811 ÷ 5,700 DLHs = $15.23 per DLH

Serva,Inc ,Manufactures and Sells Two Products: Product R4 and Product