A company has two products: AI and B2. It uses activity-based costing and has pt

Q: A company has two products: AI and B2. It uses activity-based costing and has pt

Product B2 :- Activity 1 (66000/9600) * 6600 =45375 Activity 2 (81000/10600) * 6560 =50128 Activity 3 (116000/11600) * 2600 =26000 Total O/H cost Allocated (A) 121503 Total units sold of Product B2 (B) 24110 O/H Cost pu (A/B) 5.04 Activity 1 (66000/9600) * 6600 =45375 Activity 2 (81000/10600) * 6560 =50128 Activity 3 (116000/11600) * 2600 =26000 Total O/H cost Allocated (A) 121503 Total units sold of Product B2 (B) 24110 O/H Cost pu (A/B) 5.04

ID: 2395126 • Letter: A

Question

A company has two products: AI and B2. It uses activity-based costing and has ptepared the following analysis showing budgeted cost and activity for each of Its three activity cost pools: Budgeted Activity Activity Cost Pool Activity 1 Activity 2 Actlvity 3 Budgeted Cost $66,000 $81,000 $116,000 Product A1 3,000 4,040 9,000 Product B2 6,600 6,560 2,600 Annual production and sales level of Product A1Is 10,280 units, and the annual production and sales level of Product B2 Is 24,110 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing? O $6.88 O $764 O $1000 O $13.76 O $504

Explanation / Answer

Product B2 :-

Activity 1

(66000/9600) * 6600

=45375

Activity 2

(81000/10600) * 6560

=50128

Activity 3

(116000/11600) * 2600

=26000

Total O/H cost Allocated (A)

121503

Total units sold of Product B2 (B)

24110

O/H Cost pu (A/B)

5.04