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tristanmatthias3456
tristanmatthias3456
06.05.2020 • 
Business

Astra Inc. manufactures widgets and gadgets. Astra expect to manufacture 300 widgets and 800 gadgets. Widgets require 5 direct labor-hours per unit, and gadgets require 2 direct labor-hours (DLH) per unit. Astra currently applies overhead using traditional costing using direct labor hours as the cost driver. Total estimated overhead is $426,000. However, they are now considering switching to activity-based costing (ABC) with the following cost pools, activity measures and expected activity. Labor related cost pool with estimated overhead of $280,000 to be applied using DLHs. Order size cost pool with estimated overhead of $146,000 to be applied using machine hours (MHs). They expect to use 5,100 MHs for widgets and 3,900 MHs for gadgets. Which of the following statements concerning Widgets is true? (Round intermediate calculations to 2 decimal places.) Group of answer choices

The unit product cost under traditional costing is greater than its unit product costing under ABC by approximately $15.11.
The unit product cost under traditional costing is greater than its unit product costing under ABC by approximately $24.59.
The unit product cost under traditional costing is less than its unit product costing under ABC by approximately $40.29.
The unit product cost under traditional costing is less than its unit product costing under ABC by $19.21.
The unit product cost under traditional costing is greater than its unit product costing under ABC by $19.21.

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