Addison Company has two products: A and B. Annual production and sales are 800 units of Product A and 700 units of Product B. The company has traditionally used direct labour-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.20 direct labour hours per unit and Product B requires 0.60 direct labour hours per unit. The total estimated overhead for next period is $71,286. 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: Expected Activity Activity Cost Pool Estimated Overhead Cost Product A Product B Total Activity 1 $20,000 Activity 2 40,000 General Factory 21,000 310 800 220 500 600 420 810 1,400 640 Total $81,000 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.) (Appendix 7A) The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to: Search