FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 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 | Estimated Overhead Costs | Expected Product A | Expected Product B | Total |
| Activity 1 | $30,528 | 1,000 | 600 | 1,600 |
| Activity 2 | $17,385 | 1,700 | 200 | 1,900 |
| General Factory | $50,872 | 510 | 660 | 1,170 |
| Total | $98,785 |
Note: The general
The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to:
$9.15
$51.99
$86.93
$10.23
Please show your work
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