Matt Company uses activity-based costing. The company has two products: A and B.

Question

Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 7,250 units and of Product B is 5,500 units. There are three activity cost pools, with total cost and total activity as follows:

Total Activity

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

Total Activity

   Activity Cost Pool Total Cost Product A Product B Total    Activity 1 $16,820   140     440     580        Activity 2 $29,640   870     270     1,140        Activity 3 $92,000   810     3,190     4,000    

Explanation / Answer

activity-based costing Product A = 16820*140/(140+440) +29640*870/(870+270) + 92000*810/(810+3190) =$45310

activity-based costing cost per unit of Product A = $45310/7250 =$6.25

$6.25

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