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

question 71

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 A under activity-based costing?

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

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