Morrison Company Morrison Company manufactures two products: digital cameras and video cameras.The company uses an activity-based costing system.The annual production and sales volume of digital cameras is 10,000 units and of video cameras is 8,000 units.Direct costs for the digital cameras are $122;for the video cameras,direct costs are $153. For overhead costs,there are three activity cost pools with the following expected activities and estimated total costs:

Activity Cost Pool Estimated Cost Expected Activity IPods Expected Activity MP3 players Total

Activity 1 $30,000 100 500 600

Activity 2 $45,000 600 300 900

Activity 3 $96,600 400 2,000 2,400

Refer to Morrison Company.Using ABC,the total cost per digital camera is approximately: A)$126.82 B)$127.11 C)$130.55 D)$131.50

Question

Morrison Company
Morrison Company manufactures two products: digital cameras and video cameras.The company uses an activity-based costing system.The annual production and sales volume of digital cameras is 10,000 units and of video cameras is 8,000 units.Direct costs for the digital cameras are $122;for the video cameras,direct costs are $153.
For overhead costs,there are three activity cost pools with the following expected activities and estimated total costs:

Activity Cost Pool	Estimated Cost	Expected Activity IPods	Expected Activity MP3 players	Total
Activity 1	$30,000	100	500	600
Activity 2	$45,000	600	300	900
Activity 3	$96,600	400	2,000	2,400

Refer to Morrison Company.Using ABC,the total cost per digital camera is approximately: A)$126.82 B)$127.11 C)$130.55 D)$131.50

Quizplus · Accepted Answer

First, we need to calculate the overhead cost per activity:
Activity 1: $30,000/600 = $50
Activity 2: $45,000/900 = $50
Activity 3: $96,600/2400 = $40.25

Next, we need to calculate the overhead cost per unit for each product:
Digital camera: (100/600*$50) + (600/900*$50) + (400/2400*$40.25) = $8.41
Video camera: (500/600*$50) + (300/900*$50) + (2000/2400*$40.25) = $12.70

Finally, we can calculate the total cost per unit for each product:
Digital camera: $122 + $8.41 = $130.41
Video camera: $153 + $12.70 = $165.70

Therefore, the total cost per digital camera is approximately $127.11 (rounded to the nearest cent). The best choice is B.

Morrison Company Morrison Company Manufactures Two Products: Digital Cameras and Video Cameras.The