Question
c. A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for
c.
A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: |
Budgeted Activity | |||
Activity Cost Pool | Budgeted Cost | Product A1 | Product B2 |
Activity 1 | $55,000 | 1,900 | 5,500 |
Activity 2 | $70,000 | 2,940 | 5,460 |
Activity 3 | $94,000 | 7,900 | 1,500 |
Annual production and sales level of Product A1 is 9,180 units, and the annual production and sales level of Product B2 is 23,010 units. What is the approximate overhead cost per unit of Product A1 under activity-based costing? |
$7.43
$8.33
$10.00
$12.81
$4.41
d.
A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: |
Budgeted Activity | ||||
Activity Cost Pool | Budgeted Cost | Product A | Product B | Product C |
Activity 1 | $75,000 | 6,500 | 9,500 | 20,500 |
Activity 2 | $50,000 | 7,500 | 15,500 | 8,500 |
Activity 3 | $92,000 | 3,000 | 1,500 | 2,125 |
Which of the following statements is true regarding this company's activity rates?
The activity rate under the activity-based costing system for Activity 2 is $2.05.
The activity rate under the activity-based costing system for Activity 2 is $13.89.
The activity rate under the activity-based costing system for Activity 2 is $1.59.
The activity rate under the activity-based costing system for Activity 2 is $17.53.
The activity rate under the activity-based costing system for Activity 2 is $3.02.
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