Acton Company Has Two Products: a and B

question 62

Multiple Choice

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 overhead cost per unit of Product B under the traditional costing system is closest to which of the following?

• A) $2.63.
• B) $4.32.
• C) $7.49.
• D) $54.13.

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Definitions:

Resistive Circuit

A type of electrical circuit that consists solely of resistors and obeys Ohm's Law, designed for applications where resistance is the primary concern.

Lenz's Law

A principle stating that an induced electrical current will flow in a direction that opposes the change causing it.

Inductor Coil

A component consisting of a wire wound around a core, used in circuits to store energy in a magnetic field when electrical current flows through it.

Voltage

The measure of electrical potential difference between two points in an electric field, driving electric current between those points.