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(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

  • The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $348.33.

  • The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $3.93.

  • The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $3.93.

  • 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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