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Acklin Company has two products: A and B. The annual production and sales of Product A ks 600 units and of Product B is 900
Acklin Company has two products: A and B. The annual production and sales of Product A ks 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products Product Arequires os direct labor-hours per unit and Product Brequires 0.3 direct labor-hours per unit. The total estimated overhead for next period is $63,322 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 General Factory with estimated overhead costs and expected activity as follows: Activity Cost Pool Est Ovhd Cost Expected Acty - Prod A Expected Acty Prod B Total Activity 1 $ 18,900 700 900 Activity 2 $ 15.631 1.000 100 1.100 General Factory $ 28,791 300 270 570 Total $ 63,322 The predetermined overhead rate the activity rate for Activity 1 under the activity based costing wstem is closest to 200 $27.00 594.50 52100 570.36
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