Addy Company Makes Two Products: Product a and Product B

question 6

Multiple Choice

Addy Company makes two products: Product A and Product B. Annual production and sales are 1,700 units of Product A and 1,100 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 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-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 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 overhead cost per unit of Product B under the activity-based costing system is closest to:

• A)$50.66
• B)$26.09
• C)$35.28
• D)$38.16

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Definitions:

Primacy Effect

The tendency to remember information presented at the beginning of a list better than information at the middle or end.

Memory Span

The number of items, typically words or numbers, that an individual can retain and recall in correct order in short-term memory.

Long-term Memory

The phase of the memory process that is capable of storing information for extended periods, often throughout one's life.

Short-term Memory

The segment of memory responsible for temporarily holding a small amount of information in an accessible state for a brief period.