59.A company presently uses traditional volume-based costing to allocate overhead to their products information on two of their products as follows:

A B

Selling price $8 $12

Direct material $2 $3

Direct labor $1 $2

Applied overhead $3 $4

Gross margin $2 $3

The company is considering implementing an activity based costing system. After identifying cost pools and cost driver, the amount of overhead that would be applied to product A would drop to $2 per unit, and the overhead applied to product B would increase to $8 a unit. How will the change in the way over head is allocated affect the selling price of both products?

A The price of product A would be increased, and the price of product B would be decreased

B The price of neither product would change

C The price of product A would be increased and the price of product B would increase

D The price of product A would be decreased and the price of product B would increase