(Solved): Lillich, Inc., Manufactures And Sells Two Products: Product U6 And Product R5. Data Concerning The ...
Lillich, Inc., manufactures and sells two products: Product U6 and Product R5. 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 U6 | 710 | 9.1 | 6,461 |
| Product R5 | 1,090 | 6.1 | 6,649 |
| Total direct labor-hours | 13,110 | ||
The direct labor rate is $27.20 per DLH. The direct materials cost per unit for each product is given below:
| Direct Materials Cost per Unit |
|||
| Product U6 | $250.00 | ||
| Product R5 | $167.40 | ||
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
| Estimated | Expected Activity | |||||
| Activity Cost Pools | Activity Measures | Overhead Cost | Product U6 | Product R5 | Total | |
| Labor-related | DLHs | $ | 199,638 | 6,461 | 6,649 | 13,110 |
| Production orders | orders | 70,840 | 1,150 | 1,050 | 2,200 | |
| Order size | MHs | 1,018,608 | 6,100 | 6,400 | 12,500 | |
| $ | 1,289,086 | |||||
Which of the following statements concerning the unit product cost of Product U6 is true? (Round your intermediate calculations to 2 decimal places.)
rev: 03_25_2018_QC_CS-119201
Multiple Choice
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The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $348.33.
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The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $3.93.
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The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $3.93.
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The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $348.33.
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