Fleurant, Inc., manufactures and sells two products: Product W2 and Product P8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct W24006.02,400Product P86004.02,400Total direct labor-hours 4,800The direct labor rate is $29.10 per DLH. The direct materials cost per unit is $195.60 for Product W2 and $132.30 for Product P8.The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct W2Product
P8TotalLabor-relatedDLHs$210,5762,4002,4004,800Production ordersorders 17,738400300700Order sizeMHs 273,4303,8003,6007,400 $501,744 Which of the following statements concerning the unit product cost of Product W2 is true? (Round your intermediate calculations to 2 decimal places.)
A. The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $12.41.
B. The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $12.41.
C. The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $209.06.
D. The unit product cost of Product W2 under traditional costing is greater than its unit product cost under activity-based costing by $209.06.
Answer: A
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