Adelberg Company has two products: A and B. The annual production and sales of Product A...

 

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Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,350 units and of Product B is 1,750 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.7 direct labor-hours per unit. The total estimated overhead for next period is $106,000. 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: Estimated Expected Activity Overhead Costs Product A Product B $ 32,754 1,250 18,656 850 54,590 1,225 $ 106,000 (Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.) What is the overhead cost per unit of Product B under the traditional costing system? Activity Cost Pools Activity 1 Activity 2 Order Size: Total 1,650 2,350 940 Total 2,900 3,200 2,165 Adelberg Company has two products: A and B. The annual production and sales of Product A is 2,350 units and of Product B is 1,750 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.7 direct labor-hours per unit. The total estimated overhead for next period is $106,000. 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: Estimated Expected Activity Overhead Costs Product A Product B $ 32,754 1,250 18,656 850 54,590 1,225 $ 106,000 (Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.) What is the overhead cost per unit of Product B under the traditional costing system? Activity Cost Pools Activity 1 Activity 2 Order Size: Total 1,650 2,350 940 Total 2,900 3,200 2,165

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Estimated Overheads 106000 Total Direct l... View the full answer