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Activity Based Costing for Germaine Company

Germaine Company uses activity-based costing. The company has two products: Regular and Deluxe. The annual production and sales of Regular is 10,000 units and of Deluxe 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

Regular

Deluxe

Total

Activity 1

$25,000

150

100

250

Activity 2

65,000

800

200

1,000

Activity 3

90,000

1,000

2,000

3,000

The cost per unit of Regular under activity-based costing is closest to

A) $9.70.

B) $6.00.

C) $3.00.

D) $1.50.

Solution Preview

Cost of Activity 1 allocated to Regular is 25,000/250 X 150 = 15,000
Cost ...

Solution Summary

The solution explains how to determine the product cost using activity based costing

$2.19