Reference no: EM13646358

Kebort 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, U86Y and M91F, about which it has provided the following data:

		U86Y	M91F
	Direct materials per unit...........	$19.80	$45.80
	Direct labor per unit.................	$18.20	$49.40
	Direct labor-hours per unit.......	0.70	1.90
	Annual production...................	40,000	10,000

The company's estimated total manufacturing overhead for the year is $2,541,760 and the company's estimated total direct labor-hours for the year is 47,000.

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
	Direct labor support (DLHs).............	$1,175,000
	Setting up machines (setups)............	407,960
	Part administration (part types)........	958,800
	Total..................................................	$2,541,760

		Expected Activity
		U86Y	M91F	Total
	DLHs...............	28,000	19,000	47,000
	Setups..............	2,256	658	2,914
	Part types.........	1,034	2,162	3,196

1.  The unit product cost of product U86Y under the company's traditional costing system is closest to:

A) $71.15

B) $55.50

C) $75.86

D) $38.00

2. The unit product cost of product M91F under the activity-based costing system is closest to:

A) $95.20

B) $121.57

C) $216.77

D) $197.95