Figure 4-10 The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
Departmental Data: (expected and actual)
Refer to Figure 4-10. What is the unit product cost for rug cleaners using activity based costing?
A) $11.00
B) $ 7.26
C) $ 4.00
D) $ 3.75

Question

Figure 4-10 The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
 Departmental Data: (expected and actual)
 Refer to Figure 4-10. What is the unit product cost for rug cleaners using activity based costing?
A) $11.00 
B) $ 7.26 
C) $ 4.00 
D) $ 3.75

Quizplus · Accepted Answer

To calculate the unit product cost using activity-based costing, we need to allocate the total expected cost for each activity to the product based on the expected amount of activity per unit. The expected cost and activity data is given in the table.
Total expected cost for activities = $33,000
Expected activity per unit for rug cleaners:
Machine setups = 0.4 setups per unit 
Materials handling = 4.0 moves per unit 
Total expected activity per unit = 0.4 + 4.0 = 4.4
Expected cost per unit = Total expected cost for activities / Total expected activity per unit
Expected cost per unit = $33,000 / 10,000 units = $3.30
Actual cost and activity data is not used in the calculation of product costs in activity-based costing. Therefore, the unit product cost for rug cleaners using activity-based costing is $3.30 or option B.

Figure 4-10 the Manoli Company Has Collected the Following Data