Homework SourseA company has two products A and B It uses activitybased cos
A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: Activity Cost Pool Budgeted Activity
Budgeted Cost. Product A Product B
Activity 1 $ 87,000. 3,000. 2,800
Activity 2 $ 62,000 4,500 5,500
Activity 3 $ 93,000 2,500 5,250
Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product B under activity-based costing?
Solution
Calculate overhead cost per unit of product B :
| Product B | |
| Activity 1 (87000/5800*2800) | 42000 |
| Activity 2 (62000/10000*5500) | 34100 |
| Activity 3 (93000/7750*5250) | 63000 |
| Total overhead cost | 139100 |
| Unit | 69550 |
| Overhead cost per unit | 2 per unit |
