Matt Company uses activity-based costing. The company has two products: A and B.
ID: 2469948 • 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 9,000 units and of Product B is 8,000 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 $31,000 100 520 620 Activity 2 $46,287 860 250 1,110 Activity 3 $156,750 840 3,910 4,750 The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.) $7.62 per units $1.82 per units $4.32 per units $12.61 per units
Explanation / Answer
Activities Total Activity Cost Total Activities No of Activities for - A Cost for Product - A No of Activities for - A Cost for Product - B Activity - 1 31000 620 100 5000 520 26000 Activity - 2 46287 1110 860 35862 250 10425 Activity - 3 156750 4750 840 27720 3910 129030 Total Cost 234037 68582 165455 No of Units Produced and sold 9000 8000 Cost Per Unit 7.62 20.68 The activity-based costing cost per unit of Product A - 7.62 Per Unit