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

question 107

Multiple Choice

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. The direct production costs (material and labour) for Product A are $110,600 and for B is $70,000. There are three activity cost pools for overhead, 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 }$
$\begin{array}{|l|r|r|r|r|}\hline\begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\\hline \text { Activity 1 } & \$ 18,270 & 600 & 500 & 1,100 \\\hline \text { Activity 2 } & 35,891 & 1,600 & 300 & 1,900 \\\hline \text { Activity 3 } & 48,796 & 440 & 420 & 860 \\\hline\end{array}$

-The total annual production cost for Product B is closest to which of the following?

• A) $37,816.
• B) $107,802.
• C) $65,231.
• D) $70,000.

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Definitions:

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