Matt Company Uses Activity-Based Costing The Cost Per Unit of Product a Under Activity-Based Costing

question 64

Multiple Choice

Matt Company uses activity-based costing. The annual production and sales of Product A are 8,000 units and of Product B are 6,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows: $$\begin{array} { | c | l | l | l | l | } \hline \text { Activity } & \text { Estimated } & \text { Expected Activity } \\\hline \text { Cost Pool } & \text { Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity } 1 & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & \$ 37,000 & 800 & 200 & 1,000 \\\hline \text { Activity 3 } & \$ 91,200 & 800 & 3,000 & 3,800 \\\hline\end{array}$$ The cost per unit of Product A under activity-based costing is closest to:

• A)$2.40.
• B)$6.60.
• C)$3.90.
• D)$10.59.

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Definitions:

Zygomatic

Pertaining to the zygomatic bone, which is a bone in the cheek area of the face that forms part of the orbit of the eye.

Axial Skeleton

Skull, vertebral column, and rib cage.

Rib

In anatomy, a rib refers to any of the long, curved bones forming the rib cage, which protects the chest cavity and supports the upper body.

Clavicle

A long bone that serves as a strut between the shoulder blade and the sternum or breastbone, also known as the collar bone.