Question

Brizendine, Inc., manufactures and sells two products: Product R0 and Product B6. The production of Product R0 is 900 units and of Product B6 is 700 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
Estimated Expected Activity
Activity Cost Pools Activity Measures Overhead Cost Product R0 Product B6 Total
Labor-related DLHs $ 507,394 7,200 3,500 10,700
Product testing tests 9,464 300 500 800
Order size MHs 501,205 3,100 2,800 5,900
$ 1,018,063
The overhead applied to each unit of Product R0 under activity-based costing is closest to what?: (Round your intermediate calculations to 2 decimal places.)
a. $675.91 per unit
b. $292.61 per unit
c. $761.20 per unit
d. $636.29 per unit

Answer 1

Answer:

the overhead cost per unit is $675.91

Explanation:

The computation of the overhead applied to each unit is as follows:

Labour related ($507,394 ÷ $10,700 × $7,200) $341,424

Product testing ($9,464 ÷ 800 × 300) $3,549

Order size ($501,205 ÷ $5,900 × $3,100) $263,345

Total overhead $608,318

Divided by Units 900

Overhead cost per unit $675.91

hence, the overhead cost per unit is $675.91

Therefore the correct option is a.