Question
. Atmel Inc. manufactures and sells two products. Data with regard to these products are given below. Product A Product B Units produced and sold
. Atmel Inc. manufactures and sells two products. Data with regard to these products are given below.
Product A Product B
Units produced and sold 30,000 12,000
Machine hours required per unit 2 3
Receiving orders per product line 50 150
Production orders per product line 12 18
Production runs 8 12
Inspections 20 30
Total budgeted machine hours are 100,000. The budgeted overhead costs are shown below.
Receiving costs $450,000
Engineering costs 300,000
Machine setup costs 25,000
Inspection costs 200,000
Total budgeted overhead $975,000
The cost driver for engineering costs is the number of production orders per product line. Using activity-based costing, the engineering cost per unit for Product B would be
a. $4.00.
b. $10.00.
c. $15.00.
d. $29.25.
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