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, DDW and KTL, about which it has provided the following data: DDW KTL Direct 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 appears below: Activities and Activity Measures Estimated Overhead Cost Supporting direct labor (direct labor-hours) $ 880,000 Setting up machines (setups) 376,200 Parts administration (part types) 1,276,000 Total $ 2,532,200 Expected Activity DDW KTL Total Direct labor-hours 20,000 24,000 44,000 Setups 1,408 1,100 2,508 Part types 1,540 1,012 2,552 The manufacturing overhead that would be applied to a unit of product KTL under the activity-based costing system is closest to:
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