Question
Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,350 units and of Product B is 1,750
Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,350 units and of Product B is 1,750 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.7 direct labor-hours per unit. The total estimated overhead for next period is $106,000.
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 Order Size--with estimated overhead costs and expected activity as follows:
EstimatedExpected ActivityActivity Cost PoolsOverhead CostsProduct AProduct BTotalActivity 1$32,7541,6501,2502,900Activity 218,6562,3508503,200Order Size54,5909401,2252,165Total$106,000
(Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.)
The overhead cost per unit of Product B under the traditional costing system is closest to:(Round your intermediate calculations to 2 decimal places.)
rev: 03_25_2018_QC_CS-119201
Multiple Choice
- $19.85
- $5.83
- $7.94
- $34.27
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