Jasmine Company Uses Activity-Based Costing The Cost Per Unit of Product a Under Activity-Based Costing

question 54

Multiple Choice

Jasmine Company uses activity-based costing. The company has two products: A andB. The annual production and sales of Product A is 10,000 units and of Product B is 4,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows: $\begin{array}{lrr}&\text { Estimated}& \text {Expected Activity }\\\text { Activity CostPool }&\text { Cost }& \text {ProductA}&\text { Product B}&\text { Total }\\ \text {Activity 1 } &£ 25,000&150 &100 &250\\\\ \text { Activity 2. } &£ 65,000& 800 & 200 &1,000\\\\ \text { Activity 3 } &£ 90,000& 1,000 &2,000 &3,000\\\end{array}$


The cost per unit of Product A under activity-based costing is closest to

• A)£6.00.
• B)£9.70.
• C)£1.50.
• D)£3.00.

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Definitions:

Medicare Tax

A federal payroll tax that funds Medicare, the health insurance program for individuals aged 65 and over, as well as for some younger people with disability status as determined by the Social Security Administration.

Payroll Period

The interval of time for which an employee's wages are calculated, such as weekly, bi-weekly, or monthly.

Salaries Payable

An account that represents the amounts owed but not yet paid to employees for services rendered.

Payroll Register

A comprehensive record detailing the amounts paid to employees for services rendered during a specific period.