EXERCISE 8-21 (CONTINUED)

2. The unit product cost of each product line under activity-based costing

is given below. For comparison, the costs computed by the company’s

accounting department using conventional costing are also provided.

Activity-Based

Costing Direct Labor-

Hour Base

Standard Specialty Standard Specialty

Direct materials... $20.00 $17.50 $20.00 $17.50

Direct labor ... 6.00 3.00 6.00 3.00

Manufacturing overhead .... 3.98 24.59 9.00 4.50

Total unit product cost... $29.98 $45.09 $35.00 $25.00