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A company manufactures two products: A and B. The company's accounting records revealed the following per-unit costs for direct materials and direct labor: Product A
A company manufactures two products: A and B. The company's accounting records revealed the following per-unit costs for direct materials and direct labor: Product A 4,000 Product B 5,000 Production volume (units) Direct materials Direct labor 2.5 hours at $10/hour 2 hours at $10/hour $40 $60 $25 $20 Management is considering a shift to activity-based costing and gathered the following manufacturing overhead data: Activity Cost Pool Activity cost driver Expected Activity Product A Product B Setups General factory Machine processing Estimated OH Cost $240,000 $600,000 $120,000 Number of setups Direct labor hours Machine hours 80 10,000 2,000 40 10,000 1,000 #9. Assuming that actual activity is the same as expected activity, what is the unit product cost of Product B under activity-based costing? a. $144 b. $164 c. $124 d. $104 e. None of the above
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