(Appendix 2A) Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:
Information (on a per unit basis) related to three popular products at Njombe are as follows:

-Under the traditional costing system,what would be the selling price of one unit of Model #36?
A) $2,536
B) $2,712
C) $4,080
D) $5,506

Question

(Appendix 2A) Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:
  Information (on a per unit basis) related to three popular products at Njombe are as follows:
 
-Under the traditional costing system,what would be the selling price of one unit of Model #36?
A) $2,536 
B) $2,712 
C) $4,080 
D) $5,506

Quizplus · Accepted Answer

11ea7761_198a_5329_81a5_873902bccf8b_TB2580_00

(Appendix 2A) Njombe Corporation Manufactures a Variety of Products