A company has two products: A and B.It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:
Annual production and sales level of Product A is 34,300 units,and the annual production and sales level of Product B is 69,550 units.What is the approximate overhead cost per unit of Product B under activity-based costing?
Definitions:
Elastic
Describes a situation in which the quantity demanded or supplied of a good or service changes significantly as its price changes.
Inelastic
A characteristic of goods whereby a change in price leads to a relatively smaller change in the quantity demanded or supplied.
Total-revenue Test
A method used to determine the price elasticity of demand by observing changes in total revenue as a result of price alterations.
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