Activity Based Costing for Germaine Company
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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.
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Solution Summary
The solution explains how to determine the product cost using activity based costing
Solution Preview
Cost of Activity 1 allocated to Regular is 25,000/250 X 150 = 15,000
Cost ...
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