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 10,000 units and of Product B is 7,500 units. There are three activity cost pools, with total cost and total activity as follows: Total Activity Total Cost Product A Product BTotal Activity Cost Pool Activity 1 Activity 2 Activity 3 130 820 820 430 290 3,790 560 1,110 4,610 $39,960 $145,215 The activity-based costing cost per unit of Product A is closest to: (Round your intermediate calculations to 2 decimal places.) O $2.22 per units O $6.12 per units O $16.07 per units O $2.02 per units

Explanation / Answer

Activity cost/unit of :

Activity 1=25200/560=$45

Activity 2=(39960/1110)=$36

Activity 3=(145215/4610)=$31.5

Hence total cost for Product A=(45*130)+(36*820)+(31.5*820)

=$61200

Hence cost per unit=(61200/10000)

=$6.12 per unit.

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