A Company Has Two Products: a and B Annual Production and Sales Level of Product a Is 34,300

question 63

Multiple Choice

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: $$\begin{array} { l c c c } & &{ \text { Budgeted Activity } } \\\text { Activity Cost Pool } & \text { Budgeted Cost } & \text { Product A } & \text { Product B } \\\text { Activity 1 } & \$ 87,000 & 3,000 & 2,800 \\\text { Activity 2 } & \$ 62,000 & 4,500 & 5,500 \\\text { Activity 3 } & \$ 93,000 & 2,500 & 5,250\end{array}$$ 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?

• A) $3.00
• B) $2.00
• C) $10.28
• D) $15.00
• E) $2.33

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Definitions:

Haustoria

Specialized structures of parasitic or symbiotic fungi and plants that penetrate the host's tissue to absorb nutrients.

Adventitious

Referring to structures that develop in an unusual place, such as roots growing from stems or leaves instead of from the plant's root system.

Taproots

A type of root system characterized by a single, large, central root that grows vertically downward and gives off smaller lateral roots.

Mycorrhizal

Referring to the symbiotic association between a fungus and the roots of a vascular plant, enhancing nutrient and water uptake.