Assume that a company makes only three products: Product A$,$ Product B$,$ and Product C$.$ Currently, the company uses a traditional cost system that relies on plantwide overhead cost allocation based on direct labor$-$hours. It is considering replacing its traditional cost system with an activity$-$based costing $($ABC$)$ system for internal management purposes.

The ABC system would include a total of four activities: Assembly $($allocated to products based on direct labor$-$hours$),$ Machine Setups $($allocated to products based on number of setups$),$ Material Handling $($allocated to products based on the number of material moves$),$ and Product Design $($allocated to products based on the number of products$).$

Product A Product B Product C

Number of units produced $1,000$ units $7,000$ units $2,000$ units

Direct labor hours per unit $2$ hours $2$ hours $2$ hours

Number of setups $30$ setups $50$ setups $20$ setups

Number of material moves $600$ moves $400$ moves $200$ moves

Number of products $1$ product $1$ product $1$ product

Using the plantwide approach, what percent of the company$$s total overhead cost would be allocated to Product A$?$

Multiple Choice

$33\%$

$10\%$

$25\%$

$15\%$