Acton Company has two products: A and B. The annual production and sales of Product A is 800 units and of Product B is 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:
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)
-The predetermined overhead rate (i.e.,activity rate) for Activity 1 under the activity-based costing system is closest to which of the following?
Definitions:
Spot Trade
A transaction that involves the immediate exchange of financial instruments or commodities.
Rupees
The official currency of India, symbolized as INR and used also in other South Asian countries.
International Fisher Effect
A theory proposing that the difference in nominal interest rates between two countries is equal to the expected change in their exchange rates.
Foreign Currency Approach
A method in financial analysis or accounting that deals with the effects of exchange rates on foreign currency transactions and translations.
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