Chang Manufacturing Corporation Has a Traditional Costing System in Which

Chang 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,Plain and Fancy,about which it has provided the following data:
$$\begin{array} { | l | r | r | } \hline & \text { Plain } & \text { Fancy } \\\hline \text { Direct materials per unit } & \$ 24.50 & \$ 59.30 \\\hline \text { Direct labor per unit } & \$ 5.00 & \$ 25.00 \\\hline \text { Direct labor-hours per unit } & 0.20 & 1.00 \\\hline \text { Annual production } & 45,000 & 15,000 \\\hline\end{array}$$
The company's estimated total manufacturing overhead for the year is $985,440 and the company's estimated total direct labor-hours for the year is 24,000.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:
$\begin{array}{|l|r|}\hline \begin{array}{l}\text { Activities and Actirity } \\\text { Measures }\end{array} & \text { Estimeted Overhead } \\& \text { cost}\\\text { Supporting direct labor (DLHs) } & \$ 384,000 \\\hline \text { Setting up machines (setups) } & 255,840 \\\hline \text { Parts administration (part } & 345,600 \\\text { ypes) } & \\\hline \text { Total } & \$ 985,440 \\\hline\end{array}$

The manufacturing overhead that would be applied to a unit of product Fancy under the activity-based costing system is closest to:

A) $71.57.
B) $41.06.
C) $8.11.
D) $30.51.

Correct Answer:

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