A company has two products: A and B. It uses activity-based costing and has prepared the following
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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 activities:
| Activity | Budgeted Cost | Activity Cost Driver | Budgeted Activity | |
|---|---|---|---|---|
| Product A | Product B | |||
| Activity 1 | 102,000 | Square feet | 4,500 | 4,300 |
| Activity 2 | $ 77,000 | Units produced | 6000 | 7000 |
| Activity 3 | $ 123,000 | Setups | 4000 | 6750 |
Annual production and sales level of Product A is 35,800 units, and the annual production and sales level of Product B is 71,050 units. What is the approximate overhead cost per unit of Product B under activity-based costing?
Expert Answer:
First lets calculate the predetermined overhead rate for each activity Predetermined Overhead Rate B... View the full answer
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