Answered: Salvatori, Inc., manufactures and sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Salvatori, Inc., manufactures and sells two products: Product A4 and Product Q5. 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 A4	690	7.9	5,451
Product Q5	990	4.9	4,851
Total direct labor-hours			10,302

The company has 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 A4	Product Q5	Total
Labor-related	DLHs	$	167,558	5,451	4,851	10,302
Machine setups	setups		15,050	1,250	1,150	2,400
Order size	MHs		504,027	5,100	5,400	10,500
		$	686,635

The overhead applied to each unit of Product A4 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

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