Lindsey Company Uses Activity-Based Costing

Multiple Choice

Lindsey Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 5,000 units and of Product B is 2,000 units. There are three activity cost pools, with total cost and activity as follows: The activity-based costing cost per unit of Product A is closest to:

A) $14.11
B) $13.77
C) $7.00
D) $17.70 The activity rates for each activity cost pool are computed as follows:
The overhead cost charged to Product A is:
Cost per unit = $70,550 ÷ 5,000 units = $14.11 per unit