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Assume a company produces and sells only two products14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per
Assume a company produces and sells only two products14,000 units of Product A and 6,000 units of Product B. The selling prices are $65 per unit for Product A and $96 per unit for Product B. Product A's direct materials and direct labor costs per unit are $30 and $12, respectively. Product B's direct materials and direct labor costs per unit are $34 and $20, respectively. The company uses a plantwide overhead rate based on direct labor dollars. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to three cost pools. The following additional information is available for the company as a whole and for Products A and B: Activity Cost Pool Machining Machine setups Product design Activity Measure Machine-hours Number of setups Number of products Estimated Overhead Cost $ 300,000 $ 150,000 $ 80,000 Expected Activit. 15,000 MH 200 Setups 2 Products Activity Measure Machine-hours Number of setups Number of products Product A 9,000 50 1 Product B 6,000 150 1 Using the company's plantwide approach, the total overhead cost allocated to Product A is closest to (Round your intermediate calculations to 2 decimal places.)
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