Answer:
The approximate overhead cost per unit of Product B under activity-based costing is $2.23 cost per unit
Explanation:
For computing the overhead cost per unit, first, we have to compute the allocation cost of product B for each activity which is shown below.
For Activity 1 = (Budgeted Cost × Product B) ÷ (Product A + Product B)
= ($98,000 × $3,900) ÷ ($4,100 + $3,900)
= $47,775
For Activity 2 = (Budgeted Cost × Product B) ÷ (Product A + Product B)
= ($73,000 × $6,600) ÷ ($5,600 + $6,600)
= $36,500
For Activity 3 = (Budgeted Cost × Product B) ÷ (Product A + Product B)
= ($115,000 × $6,350) ÷ ($3,600 + $6,350)
= $73,392
Total cost = Activity 1 cost + Activity 2 cost + Activity 3 cost
= $47,775 + $36,500 + $73,392
= $157,667
Now the overhead cost per unit equals to
= Total cost ÷ number of units in Product B
= $157,667 ÷ 70,650 units
= $2.23 cost per unit
