## Activity-Based Costing AnalysisA company has two products, A and B, and employs activity-based costing. The table below provides an analysis of the budgeted costs and activities for the company's three activity cost pools:| Activity Cost Pool | Budgeted Cost | Product A Activity | Product B Activity ||--------------------|---------------|--------------------|--------------------|| Activity 1 | $106,000 | 4,900 | 4,700 || Activity 2 | $81,000 | 6,400 | 7,400 || Activity 3 | $131,000 | 4,400 | 7,150 |### QuestionThe annual production and sales level of Product A is 36,200 units, and the annual production and sales level of Product B is 71,450 units. What is the approximate overhead cost per unit of Product A under activity-based costing? **Multiple Choice Options**- $1.41- $3.91- $11.04- $2.47### ExplanationTo find the overhead cost per unit for Product A, activity-based costing involves assigning direct activity costs to each product based on the usage of activities. The total cost for each activity is distributed between the products according to their respective activities. For each activity, the overhead cost is calculated as:\[ \text{Overhead Cost per Unit} = \frac{\text{Total Cost for Product A}}{\text{Total Units of Product A}} \]The solution requires summing the overhead costs for each activity and then dividing by the total units of Product A.Calculate the allocation for each activity, sum them, and then compare each outcome with the provided options to find the approximate cost.

Name: ## Activity-Based Costing AnalysisA company has two products, A and B
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Description: ## Activity-Based Costing AnalysisA company has two products, A and B, and employs activity-based costing. The table below provides an analysis of the budgeted costs and activities for the company's three activity cost pools:| Activity Cost Pool | B

Calculation of Activity Rate for each activity pool Particulars Budgeted Cost Budgeted Activity -…

Business

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A company has two products: A and B. 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 Activity 1 Activity 2 Activity 3 Budgeted Cost $106,000 $ 81,000 Product A Product B 4,700 7,400 4,900 6,400 $131,000 4,400 7,150 Annual production and sales level of Product A is 36,200 units, and the annual production and sales level of Product B is 71,450 units. What is the approximate overhead cost per unit of Product A under activity-based costing? Multiple Choice $1.41 $3.91 $11.04 $2.47

A company has two products: A and B. 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 Activity 1 Activity 2 Activity 3 Budgeted Cost $106,000 $ 81,000 Product A Product B 4,700 7,400 4,900 6,400 $131,000 4,400 7,150 Annual production and sales level of Product A is 36,200 units, and the annual production and sales level of Product B is 71,450 units. What is the approximate overhead cost per unit of Product A under activity-based costing? Multiple Choice $1.41 $3.91 $11.04 $2.47

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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