Question

A company has two products: A and B. It uses activity-based costing and has prepared the...

A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Budgeted Activity
Activity Cost Pool Budgeted Cost Product A Product B
Activity 1 $ 89,000 3,200 3,000
Activity 2 $ 64,000 4,700 5,700
Activity 3 $ 97,000 2,700 5,450


Annual production and sales level of Product A is 34,500 units, and the annual production and sales level of Product B is 69,750 units. What is the approximate overhead cost per unit of Product B under activity-based costing?

Homework Answers

Answer #1
Activity Cost Pool Budgeted Cost Product A Product B Product A Product B
Activity 1 $ 89,000.00        3,200        3,000 $ 45,935.48 $ 43,064.52
Activity 2 $ 64,000.00        4,700        5,700 $ 28,923.08 $ 35,076.92
Activity 3 $ 97,000.00        2,700        5,450 $ 32,134.97 $ 64,865.03
TOTAL $ 250,000.00      10,600      14,150 $ 106,993.53 $ 143,006.47

Overhead Cost per unit = 143,006.47 / 69,750 = $ 2.05 per unit

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