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12) Nourse Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for
12) Nourse Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that ABC system are listed below: Activity Cost Pool Activity Measure Supporting assembly Direct labor-hours (DLH) Activity Rate $ 2.50 per DLH Processing batches Number of batches $ 114.05 per batch Processing orders Number of orders Serving customers $ 66.95 per order Number of customers $ 2,026.00 per customer The cost of serving customers, $2,026.00 per customer, is the cost of serving a customer for one year. Koerner Corporation buys only one of the company's products. The details of last year's purchases of this product are listed below. Number of units purchased Number of batches Number of orders 900 units 13 batches 4 orders Direct labor-hour requirement 0.10 DLHs per unit Version 1 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year $ 13 $6 $4 $70,000 $ 6 $83,000 Year 1 Year 2 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold $ 13 $ 6 $ 4 $70,000 $ 6 Fixed selling and administrative expense per year $83,000 Year 1 Year 2 Units in beginning inventory 0 1,000 Units produced during the year 10,000 7,000 Units sold during the year 9,000 6,000 Units in ending inventory 1,000 2,000 The unit product cost under absorption costing in Year 2 is closest to: A) $39.00 B) $23.00 C) $10.00 D) $33.00
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