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

question 51

Multiple Choice

Bridget Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 2,000 units and of Product B is 3,000 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 } & \$ 9,000 & 400 & 350 & 750 \\\hline \text { Activity 2 } & 12,000 & 100 & 400 & 500 \\\hline \text { Activity 3 } & 48,000 & 400 & 1,200 & 1,600 \\\hline\end{array}$

-The cost per unit of Product A under activity-based costing is closest to which of the following?

• A) $6.00.
• B) $8.63.
• C) $9.60.
• D) $13.80.

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Definitions:

Classification

The systematic arrangement of business transactions and accounts in categories or groups based on similar characteristics for financial reporting and analysis.

Distribution

The process of making a product or service available for the consumer or business user that needs it.

Earnings Per Share

A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company’s profitability.

Preferred Dividends

Dividends that are paid out to preferred shareholders before any dividends are distributed to common shareholders, typically at a fixed rate.