The company is considering using an activity based costing system to compute 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 Data relating to these activities for the current period are given below Estimated Activity 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 Determine the unit product cost of each product for the current period using the activity based costing approach Which cost method would you use to manage this business and why

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Question: The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on

The company is considering using an activity-based costing system to compute 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. Data relating to these activities for the current period are given below.

	Estimated
Activity	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

Determine the unit product cost of each product for the current period using the activity-based costing approach.

Which cost method would you use to manage this business and why?

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