Saved Help SaveExit A company has two products A and B It us

Saved Help Save&Exit; A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and actvity for each of its three activity cost pools: Budgeted Activity Activity Cost Pool Activity 1 Activity 2 Activity 3 Budgeted Cost $88,000 ,100 2,900 $63,000 4,600 5,600 $95,000 2,600 5,350 Product A Product B Annual production and sales level of Product A is 34,400 units, and the annual production and sales level of Product B is 69650 unts What s the approximate overhead cost per unit of Product A under activity-based costing? Multiple Choice O $2.26 $3.05 $2.03 Next > 8 of 10 Eli

Solution

B. $3.05

Activity 1 allocated to Product A line: $88,000 × 3,100/6,000 = $45,467

Activity 2 allocated to Product A line: $63,000 × 4,600/10,200 = $28,412

Activity 3 allocated to Product A line: $95,000 × 2,600/7,950 = $31,069

Total overhead allocated to Product A = $104,948

Overhead per unit of Product A: $104,948/34,400 = $3.05