Dobles Corporation has provided the following data from its activity-based costing system: The company makes 420 units of product D28K a year, requiring a total of 460 machine-hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit and its direct labor cost is $25.36 per unit.
According to the activity-based costing system, the average cost of product D28K is closest to:
A) $95.34 per unit
B) $93.60 per unit
C) $74.32 per unit
D) $89.93 per unit

Question

Dobles Corporation has provided the following data from its activity-based costing system:  The company makes 420 units of product D28K a year, requiring a total of 460 machine-hours, 80 orders, and 10 inspection-hours per year. The product's direct materials cost is $48.96 per unit and its direct labor cost is $25.36 per unit.
According to the activity-based costing system, the average cost of product D28K is closest to:
A) $95.34 per unit 
B) $93.60 per unit 
C) $74.32 per unit 
D) $89.93 per unit

Quizplus · Accepted Answer

The activity rates for each activity cost pool are computed as follows:
 11eacbfc_c665_34ef_8ffe_b5d5eb43ba17_TB7552_00 The overhead cost charged to Product D28K is:
 11eacbfc_c665_5c00_8ffe_3b7663a5ba50_TB7552_00 11eacbfc_c665_5c01_8ffe_6dd11c194dc0_TB7552_00 Cost per unit = $40,043.80 ÷ 420 units = $95.34 per unit

Dobles Corporation Has Provided the Following Data from Its Activity-Based