loader  Loading... Please wait...

Question(s) / Instruction(s):

Acton Company has two products: A and B. The annual production and sales of Product A is 830 units and of Product B are 530 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.6 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $92,203. 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:

                                 Estimated Overhead     Expected Activity

  Activity Cost Pool           Costs                     Product A            Product B            Total

  Activity 1.............          $14,502                 530                                         630         1,160    

  Activity 2.............          $64,950                 2,530                                     530         3,060    

  General Factory...          $12,751                 498                                         265         763    

  Total...................           $92,203                                                  

(Note: The General Factory activity cost pools costs are allocated on the basis of direct labor-hours.)

The overhead cost per unit of Product B under the traditional costing system is closest to: (Round your final answer to two decimal places.)

a)            $10.61

b)            $13.78

c)            $8.92

d)            $60.42

Find Similar Answers by Subject

Student Reviews

Rate and review your solution! (Please rate on a Scale of 1 - 5. Top Rating is 5.)

Expert's Answer
Download Solution:

This solution includes:

  • Plain text
  • Cited sources when necessary
  • Attached file(s)
  • Solution Document(s)

Reach Us