#10 Alexander Inc., uses activity-based costing. The company produces two produc

Question

#10 Alexander Inc., uses activity-based costing. The company produces two products: Snaps and Pops. The expected annual production of Snaps is $1500, while the expected annual production of Pop is 2,200 units. There are three activity cost pools: Assembly, Testing, and Packing. The estimate costs and activities for each of these three activity pools follows: Expected Activity Activity cost pool Estimated cost Snaps Pops Total Assembly $5,548 630 130 760 Testing $25, 715 1,200 650 1,850 Packing $2,401 70 175 245 The overhead cost per unit of Pops would be closest to a) $5.32 b) $7.80 c) $31.00 d) $15.30

Explanation / Answer

Assembly: 130/760 x 5548 = $949 Testing: 650/1850 x 25715 = $9035 Packing: 175/245 x 2401 = $1715 Total overhead cost = 949 + 9035 + 1715 = $11699 Overhead cost per unit - 11699/2200 = $5.32 (a) is the answer. Hope this helps!

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