Remaining Time: 35 minutes, 10 seconds. Question Completion Status: QUESTION 15
ID: 2514944 • Letter: R
Question
Remaining Time: 35 minutes, 10 seconds. Question Completion Status: QUESTION 15 Adams Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 900 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 04 direct labor-hours per unit and Product B requires 0 5 direct labor-hours per unit. The total estimated overhe for next period is $67,522. The company is considering switching to an activity-based costing system for the purpose three overbead activity cost pools-Activity 1. Activity 2, and General Factory-with estimated overhead costs & expected activity as follows of computing unit product costs for external reports. The new activity-based costing system would have Estimated Activity Cost PoolCosts Activity 1. Activity 2 General F Total Overhead $6,915 35,659 200 700 2,800 450 500 300 24,9482.100 650 the basis of direct abor-bous, the overhead costper unit of Product A under the aetitybased If the General Factory activity cost pool's costs are allocated on costing system is closest to: O a 21.94 ? b. 67.66 O c. 48.23 O d.41.55Explanation / Answer
Activity 1 costs allocated to Product A = 6,915 * 300 / 500 = 4,149
Activity 2 costs allocated to Product B =24,948 * 2,100 / 2,800 = 18,711
General factory overhead allocated to Product A = 35,659 * 200 / 650 = 10,972
Total overhead = 33,832
Overhaed cost per unit of Product A = 33,832 / 500 = 67.66
The answer is B