Addison Company has two products: A and B. Annual production and sales are 800 units of Product A and 700 units of Product B. The company has traditionally used direct labour-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.2 direct labour hours per unit and Product B requires 0.6 direct labour hours per unit. The total estimated overhead for next period is $71,286.
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 factory 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 labour hours.)
-(Appendix 5B) The overhead cost per unit of Product B under the activity-based costing system is closest to:
Definitions:
Free-Living
Describes organisms that do not depend on another organism for survival; they are not parasitic and can exist independently in an environment.
Aquatic
Pertaining to water; living or occurring in water, whether it be freshwater, brackish, or saltwater.
Parasitic
Pertaining to an organism that lives on or in a host organism and causes harm to the host.
Terrestrial
Pertaining to or representing the earth or dry land, as opposed to aquatic environments.
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