Adelberg Company has two products: A and B. The annual production and sales of Product A Is 2,550 units and of Product B is 1,950 units. The company has traditionally used direct labor-hours as the basis for applytng all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next perlod is $108,200 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 Order Size Costs Product A Product B Total $ 33,434 1,850 2,550 1,450 1,050 3,300 19,043 55,723 3,600 1,275 1,560 2,835 Total $ 108,200
Adelberg Company has two products: A and B. The annual production and sales of Product A Is 2,550 units and of Product B is 1,950 units. The company has traditionally used direct labor-hours as the basis for applytng all manufacturing overhead to products. Product A requires 0.5 direct labor-hours per unit and Product B requires 0.8 direct labor-hours per unit. The total estimated overhead for next perlod is $108,200 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 Order Size Costs Product A Product B Total $ 33,434 1,850 2,550 1,450 1,050 3,300 19,043 55,723 3,600 1,275 1,560 2,835 Total $ 108,200
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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![Adelberg Company has two products: A and B. The annual production and sales of Product A is 2.550 units and of Product B Is 1.950 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 0.8 direct labor-hours per unit. The total estimated overhead for next perlod is $108,200.
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
$ 33,434
Total
3, 300
1,850
2,550
1,275
1,450
19,043
1,050
3,600
Order Size
55,723
$ 108, 200
1,560
2,835
Total
(Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.)
The predetermined overhead rate under the traditional costing system is closest to:
Multiple Choice
$5.29 per DLH
$19.66 per DLH
$3817 per DLH
$10.13 per DLH](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F46e79fad-d0ce-4e72-bc56-d5b759e34eee%2Fd698863f-2c2d-4cbf-a3fc-058cea2a8e1b%2Furhhcou_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Adelberg Company has two products: A and B. The annual production and sales of Product A is 2.550 units and of Product B Is 1.950 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 0.8 direct labor-hours per unit. The total estimated overhead for next perlod is $108,200.
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
$ 33,434
Total
3, 300
1,850
2,550
1,275
1,450
19,043
1,050
3,600
Order Size
55,723
$ 108, 200
1,560
2,835
Total
(Note: The Order Size activity cost pool's costs are allocated on the basis of direct labor-hours.)
The predetermined overhead rate under the traditional costing system is closest to:
Multiple Choice
$5.29 per DLH
$19.66 per DLH
$3817 per DLH
$10.13 per DLH
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