Question

Product X requires direct material of $25.00 per unit, direct labor of $30.00 per unit, 1.5 direct labor hours, and 2 options. Using activity-based costing, what is Temple Lighting’s overhead cost per unit of product? Select one: a. $25.00 b. $42.50 c. $40.00 d. $55.00

Answer 1

The answer is option (b)$42.50

Step-by-step explanation:

Solution

Given that:

Temple Lighting

Calculation of ABC rates:

Allocation table A B C=A*B

Activity cost pool Cost Driver ABC Rates Activity use Cost assigned

Assembly Direct Labor Hour 10.00 1.5 15.00

Design Number of option 12.50 2.00 25.00

Packaging Units produced 2.50 1.00 2.50

TOTAL:

15.00 + 25.00 +2.50 =$42.50

Therefore the Temple Lighting’s overhead cost per unit of product is $42.50