Nbspannual production and sales are 1100 units of product a

Question

Addy Company makes two products: Product A and Product B. Annual production and sales are 1,100 units of Product A and 700 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 0.40 direct labor hours per unit and Product B requires 0.50 direct labor hours per unit. The total estimated overhead for next period is $65,128.

 

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
Activity Cost Pool		Estimated Overhead Costs		Product A		Product B		Total
Activity 1		$23,405		1,200		350		1,550
Activity 2		10,044		1,100		140		1,240
General Factory		31,679		330		420		750
Total		$65,128
(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours.)
The predetermined overhead rate under the traditional costing system is closest to: (Round your final answer to 2 decimal places.)