Lefave, Incorporated, manufactures and sells two products: Product Q1 and Product D5. Data concerning the expected production of each product

and the expected total direct labor-hours (DLHS) required to produce that output appear below:

2

E

Product Q1

Product D5

Total direct labor-hours

Activity Cost Pools

Labor-related.

Product testing

Order size

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected

activity:

Multiple Choice

Direct

Labor-

Expected Hours Per

Production Unit

2,000

6.0

900

3.0

O $34.65 per DLH

Activity

Measures

DLHS

tests

MHS

Estimated

Overhead

Cost

$ 162,482

58,909

214,825

$ 436,216

Total

Direct

Labor-

Hours

12,000

2,700

14,700

Prax

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate

would be closest to:

Expected Activity

Product D5

2,700

800

4,700

Product Q1

12,000

900

4,800

2 of 29

Total

14,700

1,700

9,500

Next >