Item6

Time Remaining 37 minutes 19 seconds

00:37:19

Item 6

Time Remaining 37 minutes 19 seconds

00:37:19

Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 2,000 units of Product A and 2,000 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 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $107,650.

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	Estimated Overhead Costs	Expected Activity
		Product A	Product B	Total
Activity 1	$ 45,150	1,400	700	2,100
Activity 2	21,700	900	500	1,400
General Factory	40,800	800	400	1,200
Total	$ 107,650

(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: