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  3. acton company has two products: a and b. the annua

Acton Company has two products: A and B. The annual production and sales of Product...

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Accounting

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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 02 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: Expected Activity Product B Product A Total Activity Cost Pool Activity 1 Activity 2 General Factory Total Estimated Overhead Cost $14,487 64,800 12 736 500 2,500 240 600 5001 100 1,100 3,000 340 $92,023 (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labour hours.) Prey 13 of 20 Next >

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