Question: 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:
|
|
Budgeted Activity |
| Activity Cost Pool |
Budgeted Cost |
Product A |
Product B |
| Activity 1 |
$97,000 |
4,000 |
3,800 |
| Activity 2 |
$72,000 |
5,500 |
6,500 |
| Activity 3 |
$113,000 |
3,500 |
6,250 |
Annual production and sales level of Product A is 35,300 units, and the annual production and sales level of Product B is 70,550 units. What is the approximate overhead cost per unit of Product B under activity-based costing?
$3.49
$2.25
$10.28
$12.44
$1.77