Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with total cost and activity as follows: The cost per unit of Product B is closest to:

Question

Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with total cost and activity as follows:  The cost per unit of Product B is closest to:

Quizplus · Accepted Answer

The activity rates for each activity cost pool are computed as follows:
 11eacbfc_c68a_494f_8ffe_3177f054030b_TB7552_00 The overhead cost charged to Product B is:
 11eacbfc_c68a_7060_8ffe_f5c14875d653_TB7552_00 Cost per unit of Product B = Total overhead cost ÷ Number of units = $16,632 ÷ 400 units = $41.58 per unit

Abel Corporation Uses Activity-Based Costing