Answer:
C.$2,996.06 per unit
Explanation:
Calculation to determine what The unit product cost of Product N0 under activity-based costing is closest to:
First step is to Compute the activity rates
Activity Cost (a)Estimated Overhead cost (b)Total Expected Activity (a) ÷(b)Activity Rate
Labor-related $39,636÷2,700DLHs=$14.68per DLH
Production orders $57,421÷ 1,300orders =$44.17per order
Order size $432,075 ÷7,500MHs =$57.61per MH
Second step is to Compute the overhead cost per unit under activity-based costing
Using this formula
Overhead cost per unit=Activity Cost Pools and Activity Rates*Expected Activity=Amount
Let plug in the formula
Product N0
Labor-related, at $14.68 per DLH *1,100 =$16,148
Production orders, at $44.17 per order *700 =$30,919
Order size, $57.61 per MH *3,900 =$224,679
Total overhead costs assigned (a)$271,746
($16,148+$30,919+$224,679)
Number of units produced (b)100
Overhead cost per unit (a) ÷ (b)$2,717.46
($271,746÷100)
Third step is to Compute the unit product costs under activity-based costing
Product N0
Direct materials $104.80
Direct labor $173.80
(11.0 DLHs × $15.80 per DLH)
Overhead $2,717.46
Unit product cost $2,996.06
($104.80+$173.80+$2,717.46)
Therefore The unit product cost of Product N0 under activity-based costing is closest to: $2,996.06
