Hewett, Inc., manufactures and sells two products: Product E7 and Product U7. Da
ID: 2426878 • Letter: H
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 activity rate for the Production Orders activity cost pool under activity-based costing is closest to:
$77.03 per order
$82.48 per order
$73.95 per order
$83.46 per order
Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product E7 1,000 7.0 7,000 Product U7 200 8.0 1,600 Total direct labor-hours 8,600Explanation / Answer
The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:
$58422 / 700 = $83.46 per order