Vodopich Corporation has provided the following data from its activity-based costing system:
According to the activity-based costing system, the average cost of product P58Z is closest to:
A) $113.33 per unit
B) $58.30 per unit
C) $123.40 per unit
D) $118.30 per unit

Question

Vodopich Corporation has provided the following data from its activity-based costing system: 
According to the activity-based costing system, the average cost of product P58Z is closest to:
A) $113.33 per unit 
B) $58.30 per unit 
C) $123.40 per unit 
D) $118.30 per unit

Quizplus · Accepted Answer

To find the average cost of Product P58Z, we need to add up the cost of each activity it uses based on the activity rates per unit, as given in the table.

The total cost of the activity "Machine setups" is $25,000, and P58Z uses 100 setups, so the cost per unit for setups is 25,000/100 = $250.

The total cost of the activity "Material handling" is $50,000, and P58Z uses 500 material moves, so the cost per unit for material handling is 50,000/500 = $100.

The total cost of the activity "Inspection" is $18,750, and P58Z uses 750 inspections, so the cost per unit for inspection is 18,750/750 = $25.

Adding these costs together gives us an average cost of (75 + 500 + 25) = $123.40 per unit for Product P58Z. Therefore, the closest option is C ($123.40 per unit).

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