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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

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:

Budgeted Activity
Activity Cost Pool Budgeted Cost Product A Product B
Activity 1 $ 102,000 4,500 4,300
Activity 2 $ 77,000 6,000 7,000
Activity 3 $ 123,000 4,000 6,750

Annual production and sales level of Product A is 35,800 units, and the annual production and sales level of Product B is 71,050 units. What is the approximate overhead cost per unit of Product A under activity-based costing?

Multiple Choice

  • $3.73

  • $1.56

  • $2.37

  • $10.27

  • $11.59

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