Matt Company uses activity-based costing. The company has two products: A and B.
ID: 2424116 • Letter: M
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 4,000Explanation / Answer
Sales product A 7250 units
Activity 1 = $16820/580 = $29 per driver unit
Activity 2 = $29640/1140 = $26 per driver unit
Activity 3 = $92000/4000 = $23 per driver unit
Product A
Activity Cost allocated to Product A
Activity 1. $29*140 = $4060
Activity 2. $26*870 = $22620
Activity 3. $23*810 = $18630
Total. $45,310
The cost per unit of product A
= $45310/7250 units
= $6.24 per unit