Question

Lindsey Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 11,000 units and of Product B is 8,500 units. There are three activity cost pools, with total cost and total activity as follows:

		Total Activity
Activity Cost Pool	Total Cost	Product A	Product B	Total
Activity 1	$29,200	150	580	730
Activity 2	$40,150	850	250	1,100
Activity 3	$105,570	830	3,310	4,140

The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.)

$13.36

$1.59

$3.09

$5.29

Answer 1

Answer:
Particulars	Amount (in $ )
Activity 1     = Total Cost / Total Activty x Product A Activity     = $ 29,200 / 730 x 150	$ 6,000
Activity 2     = Total Cost / Total Activty x Product A Activity     = $ 40,150 / 1,100 x 850	$ 31,025
Activity 3     = Total Cost / Total Activty x Product A Activity     = $ 105,570 / 4,140 x 830	$ 21,165
Total Activity Costs allocated to Product A (A)	$ 58,190
No. of Units of Product A (B)	11,000 Units
Activity-based costing cost per unit of Product A ( A / B )	$ 5.29
Option (d) is Correct