Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,100 units and of Product B is 1,500 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 05 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $103,275 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 Order Size-with estimated overhead costs and expected activity as follows: 15 1 polnts Estimated Expected Activity Overhead Activity Cost Pools Activity 1 Activity 2 Costs 24 Product A Product B Total 31,912 18,176 53,187 1,400 2,100 1,ese 2,400 2,700 2,258 1,000 600 Order Size 1, 200 Total $ 183,275 (Note: The Order Size 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: Multiple Choice $6.73 per DLH $23.64 per DLH $45.90 per DLH
Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,100 units and of Product B is 1,500 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 05 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next period is $103,275 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 Order Size-with estimated overhead costs and expected activity as follows: 15 1 polnts Estimated Expected Activity Overhead Activity Cost Pools Activity 1 Activity 2 Costs 24 Product A Product B Total 31,912 18,176 53,187 1,400 2,100 1,ese 2,400 2,700 2,258 1,000 600 Order Size 1, 200 Total $ 183,275 (Note: The Order Size 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: Multiple Choice $6.73 per DLH $23.64 per DLH $45.90 per DLH
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter4: Linear Programming Models
Section: Chapter Questions
Problem 111P
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