RS Company manufactures and distributes two products,R and S.Overhead costs are currently allocated using the number of units produced as the allocation base.The controller has recommended changing to an activity-based costing (ABC)system.She has collected the following information: What is the total overhead per unit allocated to Product S using activity-based costing (ABC)?
A)$2.60.
B)$2.27.
C)$2.00.
D)$1.83.

Question

RS Company manufactures and distributes two products,R and S.Overhead costs are currently allocated using the number of units produced as the allocation base.The controller has recommended changing to an activity-based costing (ABC)system.She has collected the following information:  What is the total overhead per unit allocated to Product S using activity-based costing (ABC)?
A)$2.60. 
B)$2.27. 
C)$2.00. 
D)$1.83.

Quizplus · Accepted Answer

Using ABC, the total overhead cost for Product S is $56,000 ($34,000 (setup) + $12,000 (cutting) + $4,000 (packaging) + $6,000 (shipping)). The total number of units produced for Product S is 10,000. Therefore, the overhead per unit allocated to Product S using ABC is $2.27.

RS Company Manufactures and Distributes Two Products,R and S