Serva, Inc

question 13

Multiple Choice

Serva, Inc., manufactures and sells two products: Product R4 and Product N4. 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 $24.70 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: The unit product cost of Product N4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

• A)$489.43 per unit
• B)$451.00 per unit
• C)$409.69 per unit
• D)$425.26 per unit

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Definitions:

Maintenance/Repair/Operating Supply

Items and materials necessary for the upkeep and repair of operations, equipment, and facilities in an organization.

Safety Stock Inventory

A quantity of inventory kept on hand as a buffer against fluctuations in demand or supply.

Inventory Model

An analytical approach or mathematical formula used to manage and control stock levels, optimizing inventory costs and meeting demand.

Ordering Cost

The cost of the ordering process.