Question

Books and brew (bb) is a large city bookstore that sells books and music cd's, and also has a cafe. Currently, bb uses a single-driver system to allocate its operating costs to each of its three product lines, using the the number of items sold as the single cost driver. But bb's management is concerned that this allocation system may not be providing the best information for making a variety of pricing decisions. Bb's operating costs for 2017 were as follows:

Answer 1

The total cost is 1,865,200

The cost per unit is 706 per CD.

Step-by-step explanation:

Books and brew uses single driver system to allocate the cost. It has incurred total expense of 1,865,200 for the CD in 2014. The number of CD's sold are 2640 this year. The per unit cost is calculated by dividing the total cost of CD's by the number of CD sold this year.