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A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each

A company has two products: A1 and B2. 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 A1 Product B2
Activity 1 $ 52,000 1,600 5,200
Activity 2 $ 67,000 2,640 5,160
Activity 3 $ 88,000 7,600 1,200

Annual production and sales level of Product A1 is 8,880 units, and the annual production and sales level of Product B2 is 22,710 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing?

Multiple Choice

  • $7.65

  • $8.59

  • $10.00

  • $12.49

  • $4.23

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