Hewett,Inc. ,manufactures and sells two products: Product E7 and Product U7.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 $29.50 per DLH.The direct materials cost per unit is $164.10 for Product E7 and $289.50 for Product U7. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity: The unit product cost of Product E7 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$1,028.53 per unit
B)$634.71 per unit
C)$680.00 per unit
D)$954.82 per unit

Question

Hewett,Inc. ,manufactures and sells two products: Product E7 and Product U7.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 $29.50 per DLH.The direct materials cost per unit is $164.10 for Product E7 and $289.50 for Product U7. The company is considering adopting an activity-based costing system with the following activity cost pools,activity measures,and expected activity:  The unit product cost of Product E7 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:
A)$1,028.53 per unit 
B)$634.71 per unit 
C)$680.00 per unit 
D)$954.82 per unit

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total overhead ÷ Total direct labor-hours
= $808,296 ÷ 8,600 DLHs = $93.99 per DLH (rounded)
Computation of traditional unit product cost:
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