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Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,700 units and of Product B is 2,100 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $109,875.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost pools--Activity 1, Activity 2, and Order Size--with estimated overhead costs and expected activity as follows:

	Estimated		Expected Activity
Activity Cost Pools	Overhead Costs		Product A	Product B	Total
Activity 1	$	33,951	2,000	1,600	3,600
Activity 2		19,338	2,700	1,200	3,900
Order Size		56,586	1,350	1,680	3,030
Total	$	109,875

(Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.)

The predetermined overhead rate under the traditional costing system is closest to:

Multiple Choice

• $4.96 per DLH

• $18.68 per DLH

• $36.26 per DLH

• $9.43 per DLH