Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Help Save & Exit Markham Company makes two products: Basic Product and Deluxe Product. Annual production and sales are 1,600 units of Basic Product
Help Save & Exit Markham Company makes two products: Basic Product and Deluxe Product. Annual production and sales are 1,600 units of Basic Product and 1,200 units of Deluxe Product. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Basic Product requires 0.4 direct labor hours per unit and Deluxe Product requires 0.8 direct labor hours per unit. The total estimated overhead for next period is $99,535. 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 Overhead Expected Activity Basic Deluxe Activity Cost Pool Costs Product Product Total Activity 1 $30,708 Activity 2 17,610 1,200 1,800 950 2,150 550 2,350 General Factory Total 51,217 640 960 1,600 $99,535 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) The overhead cost per unit of Deluxe Product under the activity-based costing system is closest to: Multiple Choice $36.91. $42.36
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started