Boutet, Inc

Multiple Choice

Boutet, Inc., manufactures and sells two products: Product G5 and Product U1. 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 $21.10 per DLH. The direct materials cost per unit is $241.40 for Product G5 and $283.80 for Product U1. 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 U1 is true?

A) The unit product cost of Product U1 under traditional costing is greater than its unit product under activity-based costing by $93.64.
B) The unit product cost of Product U1 under traditional costing is less than its unit product cost under activity-based costing by $93.64.
C) The unit product cost of Product U1 under traditional costing is less than its unit product cost under activity-based costing by $82.26.