ABC Inc. produces a single product and manufactured 20,000 units last year. The company budgeted the following overhead costs for the year:

Indirect Factory Wages:	$	100,000
Factory Utilities:	$	40,000
Factory Depreciation:	$	60,000

Direct manufacturing costs per unit are $50. The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows:

Usage:

Cost:	Machining		Milling		Assembly
Indirect Factory Wages:	50	%	30	%	20	%
Factory Utilities:	40	%	40	%	20	%
Factory Depreciation:	10	%	90	%	0	%

The following cost drivers are used for each of the following activity cost pools:

• Machining: Machine Hours
• Milling: Milling Hours
• Assembly: Direct Labour Hours

Practical capacity for each of the cost pools are shown below:

• Machining: 18,000 Machine Hours.
• Milling: 40,000 Milling Hours.
• Assembly: 14,000 Direct Labour Hours

Actual Usage was as follows:

• Machining: 40,000 Machine Hours.
• Milling: 40,000 Milling Hours.
• Assembly: 15,000 Direct Labour Hours.

Each unit requires a budgeted 2 Machine Hours, 1 Milling Hour and 4 Direct Labour Hours.

ABC's policy is to apply a mark-up of 200% on cost.

The budgeted selling price for each unit of product using activity based costing is:

Multiple Choice

• $18 per unit.

• $16 per unit.

• $20 per unit.

• $205.50 per unit.