Annika Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and of Product B is 1,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:
Expected Activity
Activity Cost Pool Estimated Costs Product A Product B Total
Activity 1 $18,000 700 300 1,000Activity 2$24,000500 100 600Activity 3 $60,0008004001,200
The cost per unit of Product A under activty-based costing is closest to:
Answer
a. $20.40
b. $18.15
c. $17.00
d. $10.00
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