12. North Company has two products: X and Y. The company uses activity-based cos
ID: 2566386 • Letter: 1
Question
12. North Company has two products: X and Y. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools:
Activity Estimated Expected Activity
Cost Pool Overhead Cost Product X Product Y Total
Firing $ 29,200 1,000 500 1,500
Running $ 40,000 200 800 1,000
Setting $180,000 600 5,400 6,000
The annual production and sales level of Product X is 9,094 units. The annual production and sales level of Product Y is 15,826. The activity rate is 30.00$ for setting. What is the overhead cost per unit of Product X under activity-based costing (rounded to $00.00)?
Explanation / Answer
ABC system Estimated cost Cost driver Cost per driver Firing 29200 1500 19.46666667 Running 40000 1000 40 Setting 180000 6000 30 249200 ABC system Cost driver Product X Total cost Firing 19.47 1000 19466.67 Running 40 200 8000 Setting 30 600 18000 Total overheads 45466.67 Number of units 9094 Cost per unit 5.00
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