Question
ABC Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100
ABC Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785. 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 factory overhead activity cost pools-Activity 1, Activity 2, and General Factory-with estimated overhead costs and expected activity as follows: (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.) Expected Activity Activity Cost Pool Estimated Overhead Cost Product A Product B Total Activity 1 $ 30,528 1,000 600 1,600 Activity 2 $ 17,385 1,700 200 1,900 General Factory $ 50,872 510 660 1,170 Total $ 98,785 3,210 1,460 Question 1 The predetermined overhead rate under the traditional costing system is? (2 marks) $Answer Question 2 The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is? (2 marks) $Answer Question 3 The overhead cost per unit of Product B under the traditional costing system is? (2 marks) $Answer Question 4 The overhead cost per unit of Product B under the activity-based costing system is? (2 marks) $Answer
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