A company has two products: A and B. It uses activity-based costing and has prep
ID: 2408156 • Letter: A
Question
A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: Activity Cost Pool Budgeted Activity
Budgeted Cost. Product A Product B
Activity 1 $ 87,000. 3,000. 2,800
Activity 2 $ 62,000 4,500 5,500
Activity 3 $ 93,000 2,500 5,250
Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product B under activity-based costing?
Explanation / Answer
Calculate overhead cost per unit of product B :
Product B Activity 1 (87000/5800*2800) 42000 Activity 2 (62000/10000*5500) 34100 Activity 3 (93000/7750*5250) 63000 Total overhead cost 139100 Unit 69550 Overhead cost per unit 2 per unitRelated Questions
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