Business, 29.12.2020 19:20 cjdaly123

Aikman, Inc., manufactures and sells two products: Product O6 and Product O7.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 $17.50 per DLH. The direct materials cost per unit for each product is given below:
The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
The unit product cost of Product O6 is closest to:
A) $637.15 per unit
B) $896.71 per unit
C) $721.00 per unit
D) $661.45 per unit

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Answer from: Scp049

Question Completion:

Aikman, Inc., manufactures and sells two products: Product O6 and Product O7.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below:

Expected DLH Total DLH

Production

Product 06 200 9.00 1,800

Product 07 800 10.00 8,000

Total 1,000 9,800

The direct labor rate is $17.50 per DLH.The direct materials cost per unit for each product is given below:

Direct Materials

Costs / unit

Product 06 $206.50

Product 07 $162.30

The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

Activity Activity Estimated Product 06 Product 07 Total

Pool Measure Overhead

Labor-related DLHs $133,770 1,800 8,000 9,800

Product orders Orders 18,501 400 300 700

Order size MHs 145,180 3,000 3,100 6,100

Total $297,451

Aikman, Inc.

The unit product cost of Product O6 is closest to:

B) $896.71 per unit

Explanation:

a) Data and Calculations:

Product 06 Product 07

Direct Materials costs $206.50 $162.30

Direct labor costs $157.50 $175.00

Overhead cost per unit $532.71 $238.64

Total cost per unit $896.71 $575.94

Product 06 Product 07

Direct labor costs 1,800 8,000

Direct labor rate $17.50 $17.50

Total labor costs $31,500 $140,000

Units of products 200 800

Labor cost per unit $157.50 $175.00

Overhead cost Allocation Product 06 Product 07 Total

Labor-related ($13.65) $24,570 $109,200 $133,770

Product orders ($26.43) 10,572 7,929 18,501

Order size ($23.80) 71,400 73,780 145,180

Total $106,542 $190,909 $297,451

Production units 200 800

Overhead cost per unit $532.71 $238.64

Answer from: Quest

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