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: $$\begin{array} { l c c c }
& &{ \text { Budgeted Activity } } \
\text { Activity Cost Pool } & \text { Budgeted Cost } & \text { Product A } & \text { Product B } \
\text { Activity 1 } & \$ 87,000 & 3,000 & 2,800 \
\text { Activity 2 } & \$ 62,000 & 4,500 & 5,500 \
\text { Activity 3 } & \$ 93,000 & 2,500 & 5,250
\end{array}$$ 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 A under activity-based costing?
A) $3.00
B) $2.00
C) $10.28
D) $15.00
E) $2.33

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: $$\begin{array} { l c c c } 
& &{ \text { Budgeted Activity } } \
\text { Activity Cost Pool } & \text { Budgeted Cost } & \text { Product A } & \text { Product B } \
\text { Activity 1 } & \$ 87,000 & 3,000 & 2,800 \
\text { Activity 2 } & \$ 62,000 & 4,500 & 5,500 \
\text { Activity 3 } & \$ 93,000 & 2,500 & 5,250
\end{array}$$ 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 A under activity-based costing?
A) $3.00
B) $2.00
C) $10.28
D) $15.00
E) $2.33

Quizplus · Accepted Answer

The Answer of 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: $$\begin{array} { l c c c } 
& &{ \text { Budgeted Activity } } \
\text { Activity Cost Pool } & \text { Budgeted Cost } & \text { Product A } & \text { Product B } \
\text { Activity 1 } & \$ 87,000 & 3,000 & 2,800 \
\text { Activity 2 } & \$ 62,000 & 4,500 & 5,500 \
\text { Activity 3 } & \$ 93,000 & 2,500 & 5,250
\end{array}$$ 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 A under activity-based costing?
A) $3.00
B) $2.00
C) $10.28
D) $15.00
E) $2.33

A Company Has Two Products: a and B Annual Production and Sales Level of Product a Is 34,300