Lefave, Inc., manufactures and sells two products: Product Q1and Product D5. 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 Q1	1,600	5.6	8,960
Product D5	700	2.6	1,820
Total direct labor-hours			10,780

The company is considering adopting 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 Q1	Product D5	Total
Labor-related	DLHs	$	158,482	8,960	1,820	10,780
Product testing	tests		54,909	700	600	1,300
Order size	MHs		210,825	4,400	4,300	8,700
		$	424,216

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• $14.70 per DLH

• $42.24 per DLH

• $39.35 per DLH

• $24.23 per DLH

Answer rating: 100% (QA)

Solution Under Traditional costing method overhead is allocated usin... View the full answer