Look 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, N06D and M09K, about which it has provided the following data: N06DM09KDirect materials per unit$17.70 $62.50 Direct labor per unit$5.00 $16.00 Direct labor-hours per unit 0.50 1.60 Annual production (units) 40,000 15,000 The company's estimated total manufacturing overhead for the year is $2,532,200 and the company's estimated total direct labor-hours for the year is 44,000. 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 MeasuresEstimatedOverhead CostSupporting direct labor (DLHs)$880,000 Setting up machines (setups) 376,200 Parts administration (part types) 1,276,000 Total$2,532,200 Expected Activity N06DM09KTotalDLHs20,00024,00044,000Setups1,4081,1002,508Part types1,5401,0122,552 The manufacturing overhead that would be applied to a unit of product N06D under the company's traditional costing system is closest to:
A. $34.53
B. $28.78
C. $10.00
D. $63.31
Answer: B
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