Question

Activity Cost Pools Estimated Overhead Cost Expected Activity Assembly $ 515,520 52,500 machine-hours Processing orders $ 62,763 1,950 orders Inspection $ 86,089 1,960 inspection-hours Data concerning the company's product L19B appear below: Annual unit production and sales 600 Annual machine-hours 1,160 Annual number of orders 240 Annual inspection hours 190 Direct materials cost $ 54.74 per unit Direct labor cost $ 27.45 per unit According to the activity-based costing system, the unit product cost of product L19B is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

$127.96

Step-by-step explanation:

The computation of unit product cost of product L19B is shown below:-

Particulars Total pool cost Total activity Activity rate

Assembly $515,520 52,500 9,82

Processing orders $62,763 1,950 32.19

Inspections $86,089 1,960 43.92

For determining the activity rate we simply divide the total pool cost by total activity for assembly and in the same manner for others too.

Particulars Activity rate Activity Overhead allocated

Assembly 9,82 1,160 11,391.2

Processing orders 32.19 240 7,725.6

Inspections 43.92 190 8,344.8

Total 27,462

For determining the overhead allocated we simply multiply the activity rate with activity.

Overhead cost per unit = 27,462 ÷ 600

= $45.77

So,

Unit product cost = Overhead cost per unit + Direct material + Direct labor

= $45.77 + $54.74 + $27.45

= $127.96