Punches, Inc

Multiple Choice

Punches, Inc., manufactures and sells two products: Product H7 and Product Y2. 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 $17.80 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: Which of the following statements concerning the unit product cost of Product H7 is true?

A) The unit product cost of Product H7 under traditional costing is greater than its unit product under activity-based costing by $2,065.14.
B) The unit product cost of Product H7 under traditional costing is less than its unit product cost under activity-based costing by $2,065.14.
C) The unit product cost of Product H7 under traditional costing is greater than its unit product under activity-based costing by $367.56.