Activity-Based Costing at Amazon

Values:

• Total Overhead: $6,000,000
• Activity 1: 40,000 units, $2,000,000
• Activity 2: 60,000 units, $4,000,000

Requirements:

1. Allocate the overhead costs using activity-based costing.
2. Determine the cost per unit for each activity.
3. Compare these costs to traditional costing methods.
4. Discuss the advantages of using ABC in Amazon.