Josephine Has Been Investigating a Potential Switch to Activity-Based Costing

Multiple Choice

Josephine has been investigating a potential switch to Activity-Based Costing (ABC) for the cookie company where she works. She has decided to focus on their biggest seller, vanilla cookies, before moving forward with this decision. She has gathered the following pertinent financial data:
Josephine has determined that there are three key activities where Manufacturing Overhead (MOH) costs can be divided along with the total activity for the year: cutting, $34,500.00 (25,600 direct labor hours) ; washing cookie trays, $37,900.00 (15,780 trays washed) ; and wages for the supervisors, $24,600.00 (12,630 supervisor hours) . Josephine would like to decide soon. If she uses ABC, then what will the net operating income per unit be for the vanilla cookies? (Do not round the calculations.)

A) $0.73
B) $1.30
C) $1.86
D) $5.01