6 Data Deluxe Tourist 2,000 10,000 $17 8 Annual sales in units 9 Direct material

Question

6 Data Deluxe Tourist 2,000 10,000 $17 8 Annual sales in units 9 Direct materials per unit 10 Direct labor-hours per unit $25 5 S12 per DLH 12 Direct labor rate 14 Estimated Overead Expected Activity 16 Activities and Activity MeasuresCost Deluxe rst Total 17 Labor related (direct labor-hours) 80,000 10000 40,000 50,000 18 Machine setups (setups) 19 Production orders (orders) 150,000 3,000 2,000 5,000 70,000280220500 20 General factory (machine-hours) 250,000 12,000 28000 40,000 21 $550,000 (a) What is the traditional unit product cost for the Deluxe model after this change? raditional unit product cost for the Deluxe model (b) Which of the following statements are true? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) 2 The traditional unit product costs for the two models have been changed by the change in production orders because traditional overhead allocations based on direct labor-hours ignore other cost drivers such as production orders 2 The traditional unit product costs for the two models are unchanged by the change in production orders because neither the total estimated overhead cost nor the total direct labor-hours were affected 2 The traditional unit product costs for the two models are unchanged by the change in production orders because traditional overhead allocations based on direct labor-hours ignore other cost drivers such as production orders

Explanation / Answer

Statement b is correct as unit cost is not changed due to change in POs as respective cost driver are not used for absorption.

Delux   Sales in Units        2,000.00 Direct Material Cost              25.00 Direct Labour Hours                 5.00 Labour Cost@ 12 Ph              60.00 Variable Cost P.U              85.00 Total Cost absorbed in the ratio of labour hours. 1,10,000.00 Total Cost p.u              55.00 Unit Cost Traditonal            140.00

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