Question

Vanguard Corporation has provided the following data from its activity-based costing system:

Activity Cost Pool	Total Cost			Total Activity
Assembly	$	999,120		69,000	machine-hours
Processing orders		81,175		1,700	orders
Inspection		122,311		1,730	inspection-hours

The company makes 490 units of product O37W a year, requiring a total of 740 machine-hours, 30 orders, and 10 inspection-hours per year. The product's direct materials cost is $36.52 per unit and its direct labor cost is $29.86 per unit.

According to the activity-based costing system, the average cost of product O37W is closest to:

Multiple Choice

• $66.38 per unit.

• $92.61 per unit.

• $91.17 per unit.

• $89.69 per unit.

Answer 1

Answer:

		Cost per unit	Total
Units produced	490
Machine hours required	740	$14.48 =(999120/69000)	10715.2
Orders required	30	$47.75 =(81175/1700)	1432.5
Inseption hours	10	$70.7 =(122311/1730)	707
Materials		$36.52	17894.8
Labor		$29.86	14631.4
			45380.9

Total cost of 490 units of 45380.9
cost per unit = $45380.9/490 = $92.61 per unit