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Adelberg Company has two products: A and B. The annual production and sales of Product Ais 500 units and of Product Bis 1,000 units. The
Adelberg Company has two products: A and B. The annual production and sales of Product Ais 500 units and of Product Bis 1,000 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 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756. 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: Estimated Activity Overhead Expected Activity Cost Pool Costs Product A Product B Total Activity 1 $31,031 1,000 30 1,300 Activity 2 22,249 1,600 300 1.900 General Factory 15.476 200 200 400 Total $68.756 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.) The predetermined overhead rate (.e., activity rate) for Activity 2 under the activity-based costing system is closest to: $13.91 $11.71 $74.16 536.19 Adelberg Company has two products: A and B. The annual production and sales of Product Ais 500 units and of Product Bis 1,000 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 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756. 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: Estimated Activity Overhead Expected Activity Cost Pool Costs Product A Product B Total Activity 1 $31,031 1,000 300 1,300 Activity 2 22.249 1,600 300 1,900 General Factory 15,476 200 200 400 Total $68 756 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor-hours.) The overhead cost per unit of Product B under the activity-based costing system is closest to: $45.84 $7.74 $34,38 $18.41
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