Paparo Corporation has provided the following data from its activity-based costing system:

Activity

Cost Pool Total Cost Total Activity

Assembly $ 831,300 51,000 machine-hours

Processing orders $ 49,010 1,300 orders

Inspection $ 98,905 1,310 inspection-hours

Data concerning the company's product Q79Y appear below:

Annual unit production and sales 450

Annual machine-hours 1,010

Annual number of orders 55

Annual inspection hours 30

Direct materials cost $ 46.00 per unit

Direct labor cost $ 41.07 per unit

According to the activity-based costing system, the average cost of product Q79Y is closest to:

Multiple Choice

a.$133.30 per unit

b.$87.07 per unit

c.$129.50 per unit

d.$141.07 per unit

The average cost of product Q79Y is closest to = $ 133.30

Explanation:

Paparo Corporation

We find the total cost of material, labor and FOH using activity based costing.

Activity based Costs = Activity Cost / Total Cost Pool * No of Cost Pools

Direct materials cost $ 46.00 per unit * 450 = $ 20700

Direct labor cost $ 41.07 per unit*450 = $ 18481.5

Assembly Costs = $ 831,300 / 51,000 machine-hours * 1,010 hours = $ 16463

Processing orders Costs = $ 49,010 / 1,300 orders * 55 orders = $2073.5

Inspection Costs = $ 98,905 / 1,310 inspection-hours * 30 hours = $2265

Total Manufacturing Costs for 450 units = $ 59983

The average cost of product Q79Y is closest to = $ 59983/450=$ 133.29=

$ 133.30