Acklin Company has two products: A and B. The annual production and sales of Product A is 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.3 direct labor-hours per unit. The total estimated overhead for next period is $63,322. 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: Activity Cost Pool Est Ovhd Cost Expected Acty - Prod A Expected Acty -Prod B Total Activity 1 $ 18,900 700 200 900 Activity 2 $ 15,631 1,000 100 1,100 General Factory $ 28,791 300 270 570 Total $ 63,322 The predetermined overhead rate under the traditional costing system is closest to: Group of answer choices $21.00 $14.21 $111.09 $50.51
Acklin Company has two products: A and B. The annual production and sales of Product A is 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.3 direct labor-hours per unit. The total estimated overhead for next period is $63,322. 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: Activity Cost Pool Est Ovhd Cost Expected Acty - Prod A Expected Acty -Prod B Total Activity 1 $ 18,900 700 200 900 Activity 2 $ 15,631 1,000 100 1,100 General Factory $ 28,791 300 270 570 Total $ 63,322 The predetermined overhead rate under the traditional costing system is closest to: Group of answer choices $21.00 $14.21 $111.09 $50.51
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Acklin Company has two products: A and B. The annual production and sales of Product A is 600 units and of Product B is 900 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing
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:
| Activity Cost Pool | Est Ovhd Cost | Expected Acty - Prod A | Expected Acty -Prod B | Total |
| Activity 1 | $ 18,900 | 700 | 200 | 900 |
| Activity 2 | $ 15,631 | 1,000 | 100 | 1,100 |
| General Factory | $ 28,791 | 300 | 270 | 570 |
| Total | $ 63,322 |
The predetermined overhead rate under the traditional costing system is closest to:
Group of answer choices
$21.00
$14.21
$111.09
$50.51
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