Addy Company has two products: A and B. The annual production and sales of Product...
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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 external reports. 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: Expected Activity Activity Cost Pool Estimated Overhead Cost Product A Product B Total Activity 1 $40,000 1,220 600 1,820 Activity 2 16,700 1,700 150 1,850 General Factory 51,100 590 690 1,280 Total $107,800 (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 activity-based costing system is closest to which of the following?
Multiple Choice
$26.09
$35.28
$37.16
$38.26
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