Question: The firm is considering using an activity based costing system to calculate unit product costs for external financial reports instead of its traditional system based on direct labor hours. The activity based costing system would use three activity cost pools. Information relating to these activities for the current period are given below:
|
Activity
|
Estimated Overhead
|
Expected Activity
|
|
|
|
Cost Pool
|
Costs
|
Product C
|
Product D
|
Total
|
|
Machine setups
|
$13,630
|
130
|
160
|
290
|
|
Purchase orders
|
85,750
|
750
|
1,000
|
1,750
|
|
General factory
|
67,760
|
4,000
|
2,160
|
6,160
|
|
|
$167,140
|
|
|
|
Calculate the unit product cost of each product for the current period using the activity based costing approach.