Scholes Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, L45Y and F91I, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $3,170,400 and the company's estimated total direct labor-hours for the year is 60,000.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:

-The unit product cost of product F91I under the activity-based costing system is closest to:
A)$266.10
B)$98.70
C)$167.40
D)$225.52

Question

Scholes Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, L45Y and F91I, about which it has provided the following data:  The company's estimated total manufacturing overhead for the year is $3,170,400 and the company's estimated total direct labor-hours for the year is 60,000.

The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
 
-The unit product cost of product F91I under the activity-based costing system is closest to:
A)$266.10 
B)$98.70 
C)$167.40 
D)$225.52

Quizplus · Accepted Answer

The activity rates for each activity cost pool are computed as follows:
 11eaa48f_7b84_a2ca_9e4a_5b8faa24c46b_TB2485_00
 The overhead cost charged to Product F91I is:
 11eaa48f_7b84_a2cb_9e4a_45cd8039be8b_TB2485_00
 Overhead cost per unit of Product F911 = $1,674,000 $\div$  10,000 units = $167.40 per unit
 11eaa48f_7b84_a2cc_9e4a_532300f033a3_TB2485_00

Scholes Manufacturing Corporation Has a Traditional Costing System in Which