Adelberg Corporation Makes Two Products: Product a and Product B

question 100

Multiple Choice

Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 1,000 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756. 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: (Note: The General Factory 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:

• A) $11.71
• B) $38.69
• C) $171.89
• D) $23.87

---

Definitions:

Required Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, either in their vaults or on deposit at a central bank.

Money Supply

The aggregate of all financial assets available within an economy, encompassing various forms of money like bank notes, coins, and balance in bank accounts.

Watchdog Timer

Monitors logic circuits controlling the processor. If the watchdog timer, which is reset every scan, ever times out, the processor is assumed to be faulty and is disconnected from the process.

CPU

Central Processing Unit, the primary component of a computer that performs most of the processing inside a computer.