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AB Company produces 2 products. It is currently using a plant wide rate allocation system for overhead that allocates the same amount of overhead to

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AB Company produces 2 products. It is currently using a plant wide rate allocation system for overhead that allocates the same amount of overhead to each unit of product. Under this system overhead allocated to each product is $12.55 per unit. To improve product cost accuracy, management of AB Company depided to investigate the use of activitybased-costing. After further analysis, the company determined that manufacturing overhead costs can be attributed to three major activities. These activities and the amount of manufacturing overhead cost attributable to each for the current year are given below: AB Company plans to produce 25,000 units of Product A and 12,500 units of Product B. Required: (Show and label all your work. Round final unit cost to 2 decimal places.) a. Using the data above and an activity-based costing approach, determine the unit manufacturing overhead costs for each product for the current year. (7 marks) b. Is ABC costing appropriate for this company? Explain. ( 2 marks)

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