Matt Company Uses Activity-Based Costing $\quad$ $\quad$ $\quad$

question 6

Multiple Choice

Matt Company uses activity-based costing.The company has two products: A and B.The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units.There are three activity cost pools,with estimated total cost and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 20,000 & 100 & 400 & 500 \\\hline \text { Activity 2 } & 37,000 &8 0 0& 200 & 1,000 \\\hline \text { Activity 3 } & 91,200 & 8 0 0 &3 , 0 0 0 & 3,800 \\\hline\end{array}$
The cost per unit of Product A under activity-based costing is closest to which of the following?

• A) $2.40.
• B) $3.90.
• C) $6.60.
• D) $10.59. [(20,000/500) * 100 + (37,000/1,000) * 800 + (91,200/3,800) * 800]/8,000 = $6.60.

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Definitions:

Theoretical Perspectives

Frameworks or ways of viewing phenomena, typically used in academic disciplines to guide research and understand complex issues.

Cognitive-Behavioral Explanation

A perspective suggesting that dysfunctional thinking and learned patterns of unhelpful behavior play a role in the development of psychological disorders.

Negative Thoughts

Cognitive processes or thoughts that are detrimental to one’s self-esteem, mood, and actions, often a focus in cognitive-behavioral therapy.

Biochemical Imbalances

Abnormal levels of certain chemicals in the body that can affect physical and mental health.