1. Procter & Gamble Co.

Scenario: Activity-Based Costing (ABC)

Data: Procter & Gamble Co. manufactures two products: Product A and Product B. The following information is available:

• Product A: Direct materials $40,000, Direct labor $20,000, Overhead $15,000
• Product B: Direct materials $30,000, Direct labor $25,000, Overhead $12,000
• Total overhead costs: $35,000

Requirements:

1. Calculate the total cost per unit for Product A and Product B using ABC.
2. Determine the cost allocation rate for overhead based on activity-based costing.
3. Discuss the benefits of activity-based costing over traditional costing methods for Procter & Gamble Co.
4. Analyze how activity-based costing improves cost accuracy for Procter & Gamble Co.
5. Evaluate the profitability of each product using activity-based costing data.