Reference: 05-01
Acton Company Has Two Products: a and B

question 53

Multiple Choice

Reference: 05-01
Acton Company has two products: A and B. The annual production and sales of Product A are 800 units and of Product B are 500 units. The company has traditionally used direct labour-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labour-hours per unit and Product B requires
0.2 direct labour-hours per unit. The total estimated overhead for next period is $92,023.
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: $$\begin{array} { | l | l | l | l | l | } \hline \text { Activity } & & { \text { Expected Activity } } \\\hline \text { Cost Pool } & \begin{array} { l } \text { Estimated } \\\text { Overhead } \\\text { Costs }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 14,487 & 500 & 600 & 1,100 \\\hline \text { Activity 2 } & \$ 64,800 & 2,500 & 500 & 3,000 \\\hline \text { General Factory } & \$ 12,736 & 240 & 100 & 340 \\\hline \text { Total } & \$ 92,023 & & & \\\hline\end{array}$$ (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour-hours.)
-The predetermined overhead rate per DLH under the traditional costing system is closest to:

• A)$270.66.
• B)$21.60.
• C)$37.46.
• D)$13.17.

---

Definitions:

Placebo Effect

A phenomenon in which a person experiences a physiological or psychological improvement after being given a treatment with no therapeutic effect, due to their belief in the treatment's efficacy.

Breathing Exercise

Practices or techniques focused on controlling the breath, used for relaxation, stress management, or improving respiratory health.

Stressful Situation

Any circumstance or event that causes significant anxiety, pressure, or stress, challenging an individual's ability to cope.

Spontaneous Improvements

The unexpected or unplanned enhancements in performance or conditions without specific intervention.