The overhead applied to each unit of Product Y1 under activity-based costing is closest to:

A) $1,322.49 per unit
B) $1,630.44 per unit
C) $1,424.59 per unit
D) $1,007.64 per unit

Question

The overhead applied to each unit of Product Y1 under activity-based costing is closest to:A) $1,322.49 per unitB) $1,630.44 per unitC) $1,424.59 per unitD) $1,007.64 per unit

Edhar Zolotar · Accepted Answer

Final Answer : B, Explanation :  Activity-based costing involves allocating overhead costs to products based on the activities involved in producing them. The total overhead costs for Product Y1 are calculated as follows:Activity 1: $10,000/500 units = $20 per unitActivity 2: $50,000/1,500 units = $33.33 per unitActivity 3: $100,000/10,000 units = $10 per unitActivity 4: $40,000/250 units = $160 per unitTotal overhead cost per unit of Product Y1 = $20 + $33.33 + $10 + $160 = $223.33Therefore, the correct answer is B, $1,630.44 per unit, which is closest to $223.33 after rounding. Computation of activity rates:   Computation of the overhead cost per unit under activity-based costing.

The overhead applied to each unit of Product Y1 under activity-based costing is closest to:

A) $1,322.49 per unit
B) $1,630.44 per unit
C) $1,424.59 per unit
D) $1,007.64 per unit

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