# nd the expected total direct labor-hours (DLHs) required to produce that output appear below:

Boutet, Inc., manufactures and sells two products: Product G5 and Product U1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

 Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product G5 800 5.0 4,000 Product U1 800 3.0 2,400 Total direct labor-hours 6,400

The direct labor rate is \$21.10 per DLH. The direct materials cost per unit is \$241.40 for Product G5 and \$283.80 for Product U1.

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nd the expected total direct labor-hours (DLHs) required to produce that output appear below:
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The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

 Expected Activity Activity Cost Pools Activity Measures Estimated Overhead Cost Product G5 Product U1 Total Labor-related DLHs \$200,640 4,000 2,400 6,400 Production orders orders 14,959 400 300 700 General factory MHs 610,416 4,200 3,900 8,100 \$826,015

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product G5 would be closest to:

\$376.80 per unit

\$645.30 per unit

\$106.85 per unit

\$156.75 per unit

\$645.30 per unit

Note:There may be rounding off difference.

Workings:

 Step-1:Calculate Overhead rate per direct labour hour Overhead Rate per direct labour hour = Total Overhead costs / Total direct labour hours = \$ 8,26,015 / 6,400 = \$ 129.06 Step-2:Calculate Overhead costs of Product G5 Overhead costs of product G5 = Total direct labour hours x Overhead rate = \$ 4,000 x \$ 129.06 = \$ 5,16,259.38 Step-3:Calculate Overhead cost per unit of Product G5 Overhead Costs per Unit of Product G5 = Total Overhead costs of Product G5 / Total production of G5 = \$ 5,16,259.38 / 800 = \$ 645.32 Thus, Overhead cost per Unit of Product G5 is \$ 645.32

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