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Pat Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and
Pat Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and of Product B is 1,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:
Estimated Expected Activity
Activity Cost Pools Overhead Cost Product A Product B Total
Activity 1 $18,000 700 300 1,000
Activity 2 $24,000 500 100 600
Activity 3 $60,000 800 400 1,200
The overhead cost per unit of Product A under activity-based costing is closest to:
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