Lindsey Company uses activity-based costing. The company has two products: A and
ID: 2341331 • Letter: L
Question
Lindsey Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 9,000 units and of Product B is 8,000 units. There are three activity cost pools, with total cost and total activity as follows:
The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.)
$1.82
$12.61
$7.62
$4.32
Total Activity Activity Cost Pool Total Cost Product A Product B Total Activity 1 $31,000 100 520 620 Activity 2 $46,287 860 250 1,110 Activity 3 $156,750 840 3,910 4,750Explanation / Answer
Correct Answer -----$7.62
Calculations
Activity Cost Pools
Total Costs
Total Activity
Activity Rates
(A)
(B)
(A/B)
Activity 1
$ 31,000.00
620
$ 50.00
Per activity
Activity 2
$ 46,287.00
1,110
$ 41.70
Per activity
Activity 3
$ 156,750.00
4,750
$ 33.00
Per activity
Allocation of Overheads to Product A
Working
Product A
Activity Cost Pool
Activity rate
No. of activities
ABC Cost
Activity 1
$ 50.00
100
$ 5,000.00
Activity 2
$ 41.70
860
$ 35,862.00
Activity 3
$ 33.00
840
$ 27,720.00
Total Overhead cost (A)
$ 68,582.00
Total units Produced (B)
9000
Cost per Unit (A/B)
$ 7.62
Activity Cost Pools
Total Costs
Total Activity
Activity Rates
(A)
(B)
(A/B)
Activity 1
$ 31,000.00
620
$ 50.00
Per activity
Activity 2
$ 46,287.00
1,110
$ 41.70
Per activity
Activity 3
$ 156,750.00
4,750
$ 33.00
Per activity
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