Petine 20. I1. When a decision is made anong a aumber of ahematives, the benefit

Question

Petine 20. I1. When a decision is made anong a aumber of ahematives, the benefit that is lost by choosine hemative over another is the A naland cost D accrued cost 19. Addy Company has two products: A and B. The annual production and sales of Product A 1,700 units and of Product B is 1,100 units. The compay has traditionally used direct labor-bours as the basis for applying all manufactaring overhead to peoducts. Product A nequilee 3 diret labor-hours per unit and Product B requines 0.6 direct labor-hours per unit. The tool estinated overhcad for sext period is 598,785 The company is considering switching to an activity-based costing system for the parpose of compating unit peodact costs for external reports. The new activity-based costing system would have theee overhead activity cost pools-Activity 1, Activity 2, and General Factorywith estinated overhcad costs and expected activity as follows EatimaledExpected Costs Prodaet A Product B Total 30,528 1,000 17,385 1,700 200 L,600 1,900 660 1,170 Activity I ,- enoral Fastory50210 Total 598 785 Note: The General Factory activity cost poofs costs are allocated on the banis of direct abor-hours) The overhead cost per unit of Product B under the traditional costing system is closest to A. $50.66 B. $5.49 C $26.09 D SILAS Ya-7

Explanation / Answer

Q18. Answer is B. Opportunity cost Q19 Answer is A. $ 50.66 Explanation: Total labouur hours A; (1700 units @ 0.30) 510 B; (1100 units @0.6)0 660 Total labouur hours 1170 Pre-determined: Esstimated Oh /labour hours 98785 / 1170 = $ 84.43 per labour hours OH cost pere unit Total H assigned (660 hours @ 84.43 per unit 55723.8 Cost perr DLH (557239 /2200) 50.658

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