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Lillich, Inc., manufactures and sells two products: Product U6 and Product R5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:

	Expected Production	Direct Labor-Hours Per Unit	Total Direct Labor-Hours
Product U6	650	8.5	5,525
Product R5	1,030	5.5	5,665
Total direct labor-hours			11,190

The direct labor rate is $27.60 per DLH. The direct materials cost per unit for each product is given below:

	Direct Materials Cost per Unit
Product U6	$249.40
Product R5	$166.80

The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:

		Estimated		Expected Activity
Activity Cost Pools	Activity Measures	Overhead Cost		Product U6	Product R5	Total
Labor-related	DLHs	$	196,638	5,525	5,665	11,190
Production orders	orders		67,840	850	750	1,600
Order size	MHs		1,015,608	5,500	5,800	11,300
		$	1,280,086

Which of the following statements concerning the unit product cost of Product U6 is true? (Round your intermediate calculations to 2 decimal places.)

rev: 03_25_2018_QC_CS-119201

Multiple Choice

• The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $363.80.

• The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $363.80.

• The unit product cost of Product U6 under traditional costing is greater than its unit product cost under activity-based costing by $7.09.

• The unit product cost of Product U6 under traditional costing is less than its unit product cost under activity-based costing by $7.09.

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