A company has two products: A and B. It uses activity-based costing and has prep

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 Budgeted Activity Activity Cost Pool Activity 1 Activity 2 Activity 3 Budgeted Cost $ 92,000 $ 67,000 $103,000 Product A Product B 3,500 5,000 3,000 3,300 6,000 5,750 Annual production and sales level of Product A is 34,800 units, and the annual production and sales level of Product B is 70,050 units. What is the approximate overhead cost per unit of Product B under activity-based costing?

Explanation / Answer

Answer is $2.13

Activity Budgeted Cost (A) Product Activity A (B) Product Activity B (C ) Total Activity (D=B+C) Per Basis (E = A/D) Allocated to B
(C x E) 1                    92,000.00                            3,500.00                             3,300.00                             6,800.00                            13.53      44,647.06 2                    67,000.00                            5,000.00                             6,000.00                           11,000.00                              6.09      36,545.45 3                 103,000.00                            3,000.00                             5,750.00                             8,750.00                            11.77      67,685.71                 262,000.00    148,878.23 Total Qty      70,050.00 Per Unit Cost                 2.13

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.