Question

Assume that Simko, Inc. has three activity pools which have the following costs: Machine Setups, $40,000; Material Moves, $35,000; and Machine Operations, $18,000. The activity cost drivers (and driver quantity) for the three pools are, respectively, number of setups (200), number of material moves (350), and number of machine hours (360). Product ZA7 used the following quantity of activity drivers to produce 100 units of final product: 20 setups, 30 material moves, and 65 machine hours. The total ABC cost and unit ABC cost assigned to Product ZA7 is:______.

A. $93,000 total ABC cost & $93 unit ABC cost
B. $10,250 total ABC cost & $102.50 unit ABC cost
C. $93,000 total ABC cost & $930 unit ABC cost
D. $3,500 total ABC cost & $350 unit ABC cost

Answer 1

B. $10,250 total ABC cost & $102.50 unit ABC cost

Step-by-step explanation:

The computation is shown below;

Total Overhead cost allocated

= (40,000 ÷ 200) × 20 + (35,000 ÷ 350) × 30 + (18,000 ÷ 360) × 65

= 10,250

now

Cost per unit is

= 10,250 ÷ 100

= $102.50

Hence, the option b is correct