value 370 points Adams Company has two products A and B. The annual production a
ID: 2597582 • Letter: V
Question
value 370 points Adams Company has two products A and B. The annual production and sales of Product A is 2,200 units and ot Product 8 Is 1,600 units. The company has traditionally used direct labor-hours as the basis for applying ell menufectuning overhead to products Product A requires 0.4 direct labor-hours per unit and Product B requres 07 direct labor-hours per unit. The total estimated overhead for next period is $104,375 The company is considering switching to an actvny-based costing system for the purpose of compurting unih product costs for external reports. The new activity-based costing system CO poos-Acvny 1, Activity ollows would have three overhead activity 2. and General Factory-with estimated overhead costs and expected activity as Estimated Overhead Coss Expected Activity Acsvnes Cost Pools cavty 1 Actvty 2 Product A Product BTotal 1300 2.600 700 2.900 $32252 Note The General Factory activity cost poots costs are allocsted on the basis of direct labor-hours The predeteemined overhead rate pe acovity ratej for Activity 2 under the activity-based costing system is closest to O$6.33 O $3599 $46.34 O $83sExplanation / Answer
activity 2
allocated overhead cost/total of expected activity
18370/2900
6.33
Answer is A
activity 2
allocated overhead cost/total of expected activity
18370/2900
6.33
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