Pat Company uses activity-based costing. The company has two products: A and B.
ID: 2445331 • Letter: P
Question
Pat Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,800 units and of Product B is 1,050 units. There are three activity cost pools, with estimated costs and expected activity as follows:
The overhead cost per unit of Product A under activity-based costing is closest to:
rev: 09_24_2015_QC_CS-25627
A. $139.12
B. $68.28
C. $32.88
D. $63.19
Pat Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,800 units and of Product B is 1,050 units. There are three activity cost pools, with estimated costs and expected activity as follows:
Explanation / Answer
Overhead cost for Product A under Actibity based costing is
Activity 1 = $46,775 * 1300 / 2500 = 24,323
Activity 2 = $68,277 * 2300 / 3300 = 47,587
Activity 3 = $82,502 * 720 / 1420 = 41,832
Total Exp = 24,323 + 47,587 + 41,832 = $113,742
Per unit cost is = $113,742 / 1800 units = $63.19