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 poolsActivity 1, Activity 2, and General Factorywith estimated overhead costs and expected activity as follows: Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 500 units. The company has traditionally used direct labour hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour hours per unit, and Product B requires 0.2 direct labour hours per unit. The total estimated overhead for next period is $92,023.

	What is the predetermined overhead rate under the traditional costing system?
	What is the predetermined overhead rate (i.e., activity rate) for Activity 1 under the activity-based costing system?
	What is the overhead cost per unit of Product B under the traditional costing system?

		Estimated
	Activity	Overhead	Expected Activity
	Cost Pool	Costs	Product A	Product B	Total
	Activity 1	$14,487	500	600	1,100
	Activity 2	$64,800	2,500	500	3,000
	General Factory	$12,736	240	100	340
	Total	$92,023