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Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base.
Allure Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:
| Activity | Cost Driver | Amount | M | XY | ||||
| Production setups | Number of setups | $ | 82,000 | 8 | 12 | |||
| Material handling | Number of parts | 48,000 | 56 | 24 | ||||
| Packaging costs | Number of units | 130,000 | 80,000 | 50,000 | ||||
| $ | 260,000 | |||||||
What is the total overhead per unit allocated to Product M using activity-based costing (ABC)?
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