Question Completion Status QUESTION 15 Adams Corporation makes two products: Pro

Question

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 used direct labor-hours as the basis for applying all manufacturing overhead to products Product A requires 0.4 direct labor- per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhett for next period is $67,522. The company is considering swit to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would three overhead activity cost pools-Activity 1, Activity 2, and General Factory--with estimated overhead costs & expected activity as follows Expected Activity Product B Estimated Product A Total Activity Cost Pool Costs Activity 1 Activity 2 General Factory67.522 Total 500 $ 6,915 24,948 35,659 200 700 2800 450 300 2,100 200 650 If the General Factory activity cost pool's costs are allocated on the basis of direct labor-hours, the overhead cost per unit of Product A under the activity-bas costing system is closest to: o a 21.94 O b 67.66 ?. 4823 d.41.55 QUESTION 16

Explanation / Answer

Overhead cost per unit of product A :

so answer is b) 67.66

Product A Activity 1 (6915/500*300) 4149 Activity 2 (24948/2800*2100) 18711 General factory (35659/650*200) 10972 Total overhead cost 33832 Unit 500 Overhead cost per unit 67.66

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