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Cost per unit

Maya Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 10,000 units and of Product B is 4,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:

Estimated Expected Activity

Activity cost pool cost Product A Product B Total

Activity 1 $25,000 150 100 250
Activity 2 $65,000 800 200 1000
Activity 3 $90,000 1000 2000 3000

The cost per unit of Product A under activity-based costing is closest to:
A) $6.00
B) $9.70
C) $1.50
D) $3.00

Solution Preview

Allocate the cost to Product A based on the proportion of activity
Activity 1 - cost ...

Solution Summary

The solution explains how to calculate the cost per unit using activity based costing