Lindsey Company uses activity-based costing. The company has twoproducts: A and B. The annual...

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Accounting

Lindsey Company uses activity-based costing. The company has twoproducts: A and B. The annual production and sales of Product A is9,000 units and of Product B is 8,000 units. There are threeactivity cost pools, with total cost and total activity asfollows:
TotalActivity
Activity CostPool Total Cost Product A Product B Total
Activity 1 $31,000 100 520 620
Activity 2 $46,287 860 250 1,110
Activity 3 $156,750 840 3,910 4,750
The activity-based costing cost per unit of Product A is closestto: (Round your intermediate calculations to 2 decimalplaces.)
$1.82
$12.61
$7.62
$4.32

Answer & Explanation Solved by verified expert

3.7 Ratings (679 Votes)

Correct Answer -----$7.62

Calculations

Activity Cost Pools	Total Costs	Total Activity	Activity Rates
	(A)	(B)	(A/B)
Activity 1	$ 31,000.00	620	$ 50.00	Per activity
Activity 2	$ 46,287.00	1,110	$ 41.70	Per activity
Activity 3	$ 156,750.00	4,750	$ 33.00	Per activity

Allocation of Overheads to Product A

Working
Product A
Activity Cost Pool	Activity rate	No. of activities	ABC Cost
Activity 1	$ 50.00	100	$ 5,000.00
Activity 2	$ 41.70	860	$ 35,862.00
Activity 3	$ 33.00	840	$ 27,720.00

Total Overhead cost (A)			$ 68,582.00
Total units Produced (B)			9000
Cost per Unit (A/B)			$ 7.62

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In: AccountingLindsey Company uses activity-based costing. The company has twoproducts: A and B. The annual production...Lindsey Company uses activity-based costing. The company has twoproducts: A and B. The annual production and sales of Product A is9,000 units and of Product B is 8,000 units. There are threeactivity cost pools, with total cost and total activity asfollows:TotalActivityActivity CostPoolTotal CostProduct AProduct BTotalActivity 1$31,000100520620Activity 2$46,2878602501,110Activity 3$156,7508403,9104,750The activity-based costing cost per unit of Product A is closestto: (Round your intermediate calculations to 2 decimalplaces.)$1.82$12.61$7.62$4.32

		TotalActivity
Activity CostPool	Total Cost	Product A	Product B	Total
Activity 1	$31,000	100	520	620
Activity 2	$46,287	860	250	1,110
Activity 3	$156,750	840	3,910	4,750