Kozlov Corporation has provided the following data from its activity-based costing system: $$\begin{array} { l l l }
\text { Activity Cost Pool } & \text { Total Cost } & \text { Total Activity } \
\text { Assembly } & \$ 942,480 & 66,000 \text { machine hours } \
\text { Processing orders } & \$ 85,050 & 1,800 \text { orders } \
\text { Inspection } & \$ 126,854 & 1,820 \text { inspection hours }
\end{array}$$ The company makes 430 units of product A21W a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit.
- According to the activity-based costing system, the average cost of product A21W is closest to:
A) $89.72 per unit
B) $65.18 per unit
C) $64.99 per unit
D) $92.49 per unit
E) $94.11 per unit

Question

Kozlov Corporation has provided the following data from its activity-based costing system: $$\begin{array} { l l l } 
\text { Activity Cost Pool } & \text { Total Cost } & \text { Total Activity } \
\text { Assembly } & \$ 942,480 & 66,000 \text { machine hours } \
\text { Processing orders } & \$ 85,050 & 1,800 \text { orders } \
\text { Inspection } & \$ 126,854 & 1,820 \text { inspection hours }
\end{array}$$ The company makes 430 units of product A21W a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit.
- According to the activity-based costing system, the average cost of product A21W is closest to:
A) $89.72 per unit
B) $65.18 per unit
C) $64.99 per unit
D) $92.49 per unit
E) $94.11 per unit

Quizplus · Accepted Answer

The average cost per unit includes direct materials, direct labor, and allocated overhead costs. Calculate overhead rates for each activity, allocate them to product A21W, and sum with direct costs to find the average cost per unit.

Kozlov Corporation Has Provided the Following Data from Its Activity-Based