Addy Company Has Two Products: a and B $\quad$ $\quad$

question 126

Multiple Choice

Addy Company has two products: A and B. The annual production and sales of Product A is 1,700 units and of Product B is 1,100 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 0.6 direct labour hours per unit. The total estimated overhead for next period is $98,785.

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for externalreports. 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:

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array}{|l|r|r|r|r|r}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \begin{array}{r}\text { Estimated } \\\text { Overhead Cost }\end{array} & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,528 & 1,000 & 600 & 1,600 \\\hline \text { Activity 2 } & 17,385 & 1,700 & 200 & 1,900 \\\hline \text { General Factory } & \underline{50,872} & 510 & 660 & 1,170 \\\hline \text { Total } & \$ 98,785 & & &\\\hline\end{array}$

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.)
- The predetermined overhead rate (i.e.,activity rate) for Activity 2 under the activity-based costing system is closest to which of the following?

• A) $9.15.
• B) $10.23.
• C) $51.99.
• D) $86.93.

Recognize the phenomenon of political corruption and the reasons behind regulatory capture.

Analyze the impact of special interest groups and lobbyism on democratic processes and government policies.

Understand the economic inefficiencies that can result from majority voting and methods to resolve such inefficiencies.

Grasp the concept of regulatory capture and the effects of deregulation.

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Definitions:

Idea Generation

The process of creating, developing, and communicating new thoughts or concepts.

Diffusion

The process through which new ideas, practices, or products spread within a society or from one society to another.

Tolerate Uncertainty

The ability to remain calm and maintain performance despite ambiguity or lack of information about future events.

Diverse Experiences

A range of varied encounters and backgrounds that an individual or group might have.