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Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 875 units of Product A and 800 units of
Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 875 units of Product A and 800 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.8 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $129,400. 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 Activity 1 Activity 2 General Factory Total Estimated Overhead Expected Activity Costs $ 54,180 35,400 39,820 Product A 1,400 1,300 Product B 700 Total 2,100 700 2,000 700 400 1,100 $ 129,400 (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: Multiple Choice $43.50
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