Asked by
Austin Hickner
on Oct 11, 2024
Verified
Lillich, Inc., manufactures and sells two products: Product U6 and Product R5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: 
The direct labor rate is $27.10 per DLH.The direct materials cost per unit for each product is given below: 
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: 
Which of the following statements concerning the unit product cost of Product U6 is true?
A) The unit product cost of Product U6 under traditional costing is greater than its unit product under activity-based costing by $389.58.
B) The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $389.58.
C) The unit product cost of Product U6 under traditional costing is greater than its unit product under activity-based costing by $1.33.
D) The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $1.33.
Activity-Based Costing
A method of cost accounting that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.
- Investigate and outline the variances and commonalities among classical costing methods and Activity-Based Costing in the assessment of product costs.
- Evaluate the cost for each unit under traditional and activity-based costing models.
Verified Answer
SM
Learning Objectives
- Investigate and outline the variances and commonalities among classical costing methods and Activity-Based Costing in the assessment of product costs.
- Evaluate the cost for each unit under traditional and activity-based costing models.