Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 1000 units of Product A and 800 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 0.8 direct labor-hours per unit and Product B requires 0.5 direct labor-hours per unit. The total estimated overhead for next period is $125,320.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
ActivityActivity Cost PoolEstimated Overhead CostsProduct AProduct BTotalActivity 1$52,000?1300?700?2000?Activity 2 26,880?1400?700?2100?General Factory 46,440?800?400?1200?Total$125,320? (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. $38.80
B. $20.30
C. $42.60
D. $53.30
Answer: D
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