Assume that a pet food manufacturer is considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 0.5 pound cans. The company identified the following partial list of activities, costs, and activity drivers expected for the next year: Activity Expected Costs Cost Driver Handling materials $105,000 Number of batches made Storage costs $820,000 Weight of finished product Dog Food Cat Food Production volume 100,000 units 200,000 units Batches made 200 batches 150 batches1. How much overhead cost will be assigned to each unit of product using activity-based costing (ABC)?
a. Dog food: $4.62: cat food: $4.62.
b. Dog food: $2.64; cat food: $2.64.
c. Dog food: $8.60: cat food: $0.33.
d. Dog food: $0.26: cat food: $8.60.
e. Dog food: $0.12; cat food: $3.85.
2. Which of the following would not be considered a product cost?
a. Direct material costs.
b. Factory supervisor's salary.
c. Direct labor costs.
d. Budget accountant's salary.
e. Manufacturing overhead costs.
