Reference no: EM13646368

Pacchiana 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, R21V and D00B, about which it has provided the following data:

		R21V	D00B
	Direct materials per unit.................	$19.60	$61.70
	Direct labor per unit.......................	$3.90	$19.50
	Direct labor-hours per unit.............	0.30	1.50
	Annual production.........................	45,000	15,000

The company's estimated total manufacturing overhead for the year is $1,262,880 and the company's estimated total direct labor-hours for the year is 36,000.

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:

	Activities and Activity Measures	Estimated Overhead Cost
	Assembling products (DLHs)....................	$   108,000
	Preparing batches (batches).......................	362,880
	Product support (product variations).........	792,000
	Total...........................................................	$1,262,880

		Expected Activity
		R21V	D00B	Total
	DLHs........................	13,500	22,500	36,000
	Batches.....................	1,440	1,152	2,592
	Product variations.....	1,404	576	1,980

1.  The unit product cost of product R21V under the company's traditional costing system is closest to:

A) $34.02

B) $24.40

C) $41.36

D) $23.50

2. The unit product cost of product D00B under the activity-based costing system is closest to:

A) $111.81

B) $133.82

C) $81.20

D) $30.61