Question
Forrer Company has two products: A and B. The annual production and sales level of Product A is 18,188 units. The annual production and sales
Forrer Company has two products: A and B. The annual production and sales level of Product A is 18,188 units. The annual production and sales level of Product B is 31,652. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools.
Activity Cost Pool | Estimated Cost | Expected Activity | |
Product A | Product B | ||
Activity 1 | $ 80,000 | 200 | 800 |
Activity 2 | 360,000 | 600 | 5,400 |
Activity 3 | 58,400 | 1,000 | 500 |
Part (a)
What is the total overhead cost allocated to Product B under activity-based costing?
Part (b)
What is the overhead cost per unit of Product B under activity-based costing? Part (c)
Compute the profit margin for Product B using activity-based costing.
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