Addy Company makes two products: Product A and Product B. Annual production and sales are...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Addy Company makes two products: Product A and Product B. Annual production and sales are 2,500 units of Product A and 2,100 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 0.20 direct labor hours per unit and Product B requires 0.70 direct labor hours per unit. The total estimated overhead for next period is $169,720. 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 $60,225 2,600 1,050 3,650 Activity 2 27,740 2,500 420 2,920 General Factory 81,755 750 1,260 2,010 Total $169,720 (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.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
