n and sales of Product A are 8,000 units and of Product B are 6,000 units. There

Question

n and sales of Product A are 8,000 units and of Product B are 6,000 units. There are three activity cost pools, Matt Company uses activity-based costing. The company has two products: A and B. The annual p with estimated total cost and expected activity as follows: Expected Activity Activity Cost Pool Activity 1 Activity 2 Activity 3 Estimated Cost $20,000 $37000 $91,200 Product A 100 800 800 Product B 400 200 3,000 Total 500 1000 3,800 The cost per unit of Product A under activity-based costing is closest to: O $2.40. O $3.90 O $6.60. O $10.59.

Explanation / Answer

Cost per unit for :

Activity 1=($20,000/500)=$40

Activity 2=($37000/1000)=$37

Activity 3=($91200/3800)=$24

Total cost for Product A=(40*100)+(37*800)+(24*800)=$52800

Hence cost per unit =($52800/8000)

=$6.60

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