Question

Olmo, Inc., manufactures and sells two products: Product KO and Product H9. The annual production and sales of Product of KO IS 800 units and of Product H9 is 800 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Activity Cost Pools Measures Labor-related DLHS Production orders orders Order size MHS Estimated Overhead Cost $ 550, 308 53,319 835, 916 $1,439,543 Product KO Product H9 Total 3,200 1,600 4,800 900 500 1,400 2,500 3,100 5,600 The overhead applied to each unit of Product KO under activity-based costing is closest to: (Round your Intermediate calculations to 2 decimal places.) Multiple Choice O $450.50 per unit O $957.92 per unit O $466.47 per unit O $899.72 per unit

Answer 1

Activity cost pool	Activity rate
Labor-related	114.65	=550308/4800
Production orders	38.09	=53319/1400
Order size	149.27	=835916/5600
	Product K0
Labor-related	366880	=3200*114.65
Production orders	34281	=900*38.09
Order size	373175	=2500*149.27
Total overhead applied	774336
Divide by units	800
Overhead applied to each unit	967.92	per unit
Option B $967.92 per unit is correct