Question
In: Accounting
Abel Company uses activity-based costing. The company has two products: A and B. The annual production...
Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
| Expected Activity | ||||
|---|---|---|---|---|
| Activity Cost Pool | Estimated Cost | Product A | Product B | Total |
| Activity 1 | $16,660 | 600 | 100 | 700 |
| Activity 2 | 18,450 | 1,100 | 700 | 1,800 |
| Activity 3 | 9,731 | 60 | 160 | 220 |
22. The cost per unit of Product A is closest to which of the following?
A. $27.91.
B. $56.38.
C. $141.04.
D. $70.52.
Solutions
Expert Solution
Activity rate=Respective cost/Respective activity
Activity rate for:
Activity 1=(16,660/700)=$23.8
Activity 2=(18450/1800)=$10.25
Activity 3=(9731/220)=$44.2318182(Approx)
Hence cost for A=(23.8*600)+(10.25*1100)+(44.2318182*60)
=$28208.91(Approx)
Hence cost per unit=28208.91/200
=$141.04(Approx)
ekkarill92 answered 2 years agoRelated Solutions
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