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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 | $87,000 | 3,000 | 2,800 |
| Activity 2 | $62,000 | 4,500 | 5,500 |
| Activity 3 | $93,000 | 2,500 | 5,250 |
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
Answer
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