Question

Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 5,000 units and of Product B is 7,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows: Expected Activity Activity Cost Pool Estimated Cost Product A Product B Total Activity 1 $24,000 200 400 600 Activity 2 36,000 700 200 900 Activity 3 81,200 800 3,000 3,800 The cost per unit of Product B under activity-based costing is closest to which of the following? Multiple Choice $12.59 $16.45 $13.50 $15.60

Answer 1

Cost per unit of product B = (24000*400/600 + 36000*200/900 + 81200*3000/3800)/7000

= $12.59 per unit