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

question 65

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 5,000 units and of Product B is 7,000 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 }$ $\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 24,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 36,000 & 700 & 200 & 900 \\\hline \text { Activity 3 } &8 1 , 2 0 0 & 8 0 0 & 3 , 0 0 & 3 , 8 0 0 \\\hline\end{array}$
The cost per unit of Product B under activity-based costing is closest to which of the following?

• A) $15.60
• B) $14.92
• C) $16.45
• D) $13.50 [(24,000/600)*400 + (36,000/900)* 200 + (81,200/3,800)* 3,000]/7,000 = $14.92.

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Definitions:

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