Reference no: EM132581089

A company manufactures and sells two products: Product A1 and Product C4. 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 A1                                  300                              4.0                1, 200

Product C4                                   600                             2.0                1, 200

Total direct labor-hours                                                                          2,400

The direct labor rate is $26.70 per DLH. The direct materials cost per unit is $202 for Product A1 and $264 for Product C4.

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 PoolsActivity Measures

                                     Overhead Cost  Product A1    Product C4         Total

Labor-related DLHs                 $36,800        1,200          1,200            2,400

Production orders orders          58,420             400             600          1,000

Order sizeMHs                          119,050         3,600            3,500       7,100 

                                                 $214,270

Question 1: The total cost per unit of Product C4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

Multiple Choice

Option 1: $504.31 per unit

Option 2: $414.77 per unit

Option 3: $512.13 per unit

Option 4: $495.96 per unit