Question
Show work please! Addy Company makes two products: Product A and Product B. Annual production and sales are 1,100 units of Product A and 700
Show work please!
Addy Company makes two products: Product A and Product B. Annual production and sales are 1,100 units of Product A and 700 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 0.40 direct labor hours per unit and Product B requires 0.50 direct labor hours per unit. The total estimated overhead for next period is $65,128. |
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: |
Expected Activity | ||||||||
Activity Cost Pool | Estimated Overhead Costs | Product A | Product B | Total | ||||
Activity 1 | $23,405 | 1,200 | 350 | 1,550 | ||||
Activity 2 | 10,044 | 1,100 | 140 | 1,240 | ||||
General Factory | 31,679 | 330 | 420 | 750 | ||||
Total | $65,128 | |||||||
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.) |
The predetermined overhead rate under the traditional costing system is closest to: (Round your final answer to 2 decimal places.) |
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