МОН with a hat is the Me Activ
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:ABC Company uses activity-based costing to allocate MOH. The company has 2 products d and e. The annual
production of sales of Product d are 1,000 units and product e is 3000 units. There are three activity cost pool
of MOH with an estimated total cost of $69,000.
What is the MOH cost per unit for product d under activity-based costing?
Expected Activity (Allocation base)
Total
Activity
Cost pool (for MOH)
Activity 1
Activity 2
Activity 3
Estimated
Cost of MOH
Product d
Product e
$9000
500
500
1000
12000
200
200
500
48,000
500
1100
1600
Expert Solution
Step 1
Activity based costing is the recent popular technique in Cost Accounting to allocate fixed costs to the product based on its activity [activity pools]. The main purpose is to allocate the fixed cost in an optimum manner so as to reach out with actual cost of each product.
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