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Adeberg Company has two products A and B. The annual production and sales of Product A2300 unsts and of Product 8s00 uns The company has tradtionally uned deect labor hours as the basn for applyng all manufacturing overhead to products. Phoduct A requires 03 drect labor hours per unit and Phoduct Breqres 06 drect labor hours per unt The total estimated overhead for nest peod a S05.475 The company is considering switching to an activity based costing system for the purpose of computing unit product costs for extemal reports The new activity based costing yhen would have thee overhead activity cost poos-Activity 1 Activity 2, and Order Sze-with estimated overhead costs and expected acthvity an follows Estimated Expected Activity Overhead Costs Activity Cost Pools Product A Product Total Activity 1 32,592 18,564 54, 319 $ 105,475 1,600 2, 00 1,200 2,00 3,100 Activity 2 Order Size 690 1,020 1,710 Total

Adeberg Company has two products A and B. The annual production and sales of Product A2300 unsts and of Product 8s00 uns The company has tradtionally uned deect labor hours as the basn for applyng all manufacturing overhead to products. Phoduct A requires 03 drect labor hours per unit and Phoduct Breqres 06 drect labor hours per unt The total estimated overhead for nest peod a S05.475 The company is considering switching to an activity based costing system for the purpose of computing unit product costs for extemal reports The new activity based costing yhen would have thee overhead activity cost poos-Activity 1 Activity 2, and Order Sze-with estimated overhead costs and expected acthvity an follows Estimated Expected Activity Overhead Costs Activity Cost Pools Product A Product Total Activity 1 32,592 18,564 54, 319 $ 105,475 1,600 2, 00 1,200 2,00 3,100 Activity 2 Order Size 690 1,020 1,710 Total

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Adelberg Company has two products: A and B. The annual production and sales of Product Ais 2300 units and of Product Bis 1700 units. The company has traditionally used direct labor hours as the basis for applying all manufacturing overhead to products. Product A requires 03 direct laborhours per unit and Product B requires 06 direct labor-hours per unit. The total estimated overhead for next period is S105,475 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 Activity Cost Pools Activity 1 Activity 2 Costs Product A Product B Total 32,592 18,564 54,319 1,600 2,300 1,200 2,800 3,100 1,710 80e Order Size 690 1,020 Total $ 105,475 (Note: The Order Sze activity cost pool's costs are allocated on the bass of direct labor-hours) The predetermined overhead rate (Le, activity rate) for Activity 2 under the activity-based costing systemis closest to Multiple Choice O se07 O 55 99 O $4260
Transcribed Image Text:Adelberg Company has two products: A and B. The annual production and sales of Product Ais 2300 units and of Product Bis 1700 units. The company has traditionally used direct labor hours as the basis for applying all manufacturing overhead to products. Product A requires 03 direct laborhours per unit and Product B requires 06 direct labor-hours per unit. The total estimated overhead for next period is S105,475 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 Activity Cost Pools Activity 1 Activity 2 Costs Product A Product B Total 32,592 18,564 54,319 1,600 2,300 1,200 2,800 3,100 1,710 80e Order Size 690 1,020 Total $ 105,475 (Note: The Order Sze activity cost pool's costs are allocated on the bass of direct labor-hours) The predetermined overhead rate (Le, activity rate) for Activity 2 under the activity-based costing systemis closest to Multiple Choice O se07 O 55 99 O $4260
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