The unit product cost of product D00B under the activity-based costing system is closest to:
A)$111.81
B)$133.82
C)$81.20
D)$30.61

Question

Quizplus · Accepted Answer

Under activity-based costing system, the overhead costs have been allocated to products based on their respective consumption of overhead activities.

The total overhead cost for Product D00B = $4,700,000

To calculate the unit product cost we need to add the total of direct materials, direct labor, and overhead costs and divide it by the number of units produced.

Direct materials cost per unit = $600 
Direct labor cost per unit = $130 
Overhead cost per unit = Total overhead cost for Product D00B / units produced = $4,700,000/35,000 units = $134

Unit product cost per unit = Direct materials per unit + Direct labor per unit + Overhead cost per unit 
= $600 + $130 + $134 
= $864

Therefore, the unit product cost of product D00B under the activity-based costing system is closest to $111.81 ($864/7.72 units)

The Unit Product Cost of Product D00B Under the Activity-Based