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

question 125

Multiple Choice

Abel Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with estimated costs and expected activity as follows:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\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 } & \$ 16,660 & 600 & 100 & 700 \\\hline \text { Activity 2 } & 18,450 & 1,100 & 700 & 1,800 \\\hline \text { Activity 3 } & 9,731 & 60 & 160 & 220 \\\hline\end{array}$

-The cost per unit of Product A is closest to which of the following?

• A) $27.91.
• B) $56.38.
• C) $141.04.
• D) $70.52.

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Definitions:

Stereotype

A generalized belief or assumption about the characteristics, attributes, and behaviors of a group or category of people.

Attribution Theory

A social psychology theory that explains how individuals infer the causes of their own and others' behavior and events.

Fundamental Attribution Error

A cognitive bias where people are more likely to attribute another's actions to their character or personality, while overlooking potential situational influences.

Explanations

The process of making something clear or understandable, often involving the provision of reasons, causes, or justifications.