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.
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