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Phoniex University
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(Appendix 4A) Koszyk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, P85G and C43S, about which it has provided the following data:
| Â | P85G | C43S |
| Direct materials per unit | $36.50 | $63.10 |
| Direct labor per unit | $20.80 | $31.20 |
| Direct labor-hours per unit | 0.80 | 1.20 |
| Annual production (units) | 35,000 | 10,000 |
The company's estimated total manufacturing overhead for the year is $2,264,000 and the company's estimated total direct labor-hours for the year is 40,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
| Activities and Activity Measures | Estimated Overhead Cost |
| Supporting direct labor (DLHs) | $1,160,000 |
| Setting up machines (setups) | 288,000 |
| Parts administration (part types) | 816,000 |
| Total | $2,264,000 |
Â
| Â | Expected Activity | ||
| Â | P85G | C43S | Total |
| DLHs | 28,000 | 12,000 | 40,000 |
| Setups | 1,480 | 920 | 2,400 |
| Part types | 1,880 | 840 | 2,720 |
The manufacturing overhead that would be applied to a unit of product P85G under the company's traditional costing system is closest to:
| Â | Â | $89.67 |
| Â | Â | $45.28 |
| Â | Â | $44.39 |
| Â | Â | $23.20 |
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