XYZ Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: Activity Cost Driver Amount M XY Production setups Number of setups $ 82,000 8 12 Material handling Number of parts 48,000 56 24 Packaging costs Number of units 130,000 50,000 80,000 $ 260,000 What is the total overhead per unit allocated to Product M using activity-based costing (ABC)? Select one: a. none of the given answer. b. $2.33. c. $1.79. d. $1.83. e. $2.27.
XYZ Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information: Activity Cost Driver Amount M XY Production setups Number of setups $ 82,000 8 12 Material handling Number of parts 48,000 56 24 Packaging costs Number of units 130,000 50,000 80,000 $ 260,000 What is the total overhead per unit allocated to Product M using activity-based costing (ABC)? Select one: a. none of the given answer. b. $2.33. c. $1.79. d. $1.83. e. $2.27.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
XYZ Company manufactures and distributes two products, M and XY.
Activity
Cost Driver
Amount
M
XY
Production setups
Number of setups
$
82,000
8
12
Material handling
Number of parts
48,000
56
24
Packaging costs
Number of units
130,000
50,000
80,000
$
260,000
What is the total overhead per unit allocated to Product M using activity-based costing (ABC)?
Select one:
a. none of the given answer.
b. $2.33.
c. $1.79.
d. $1.83.
e. $2.27.
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