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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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