Njombe Corporation Manufactures a Variety of Products

question 300

Multiple Choice

Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows: Information (on a per unit basis) related to three popular products at Njombe are as follows:
Under the activity-based costing system, what would be the selling price of one unit of Model #36?

• A) $2,536
• B) $2,712
• C) $4,080
• D) $5,506

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