Paparo Corporation has provided the following data from its activity-based costing system:

Activity
Cost Pool Total Cost Total Activity
Assembly $ 831,300 51,000 machine-hours
Processing orders $ 49,010 1,300 orders
Inspection $ 98,905 1,310 inspection-hours
Data concerning the company's product Q79Y appear below:

Annual unit production and sales 450
Annual machine-hours 1,010
Annual number of orders 55
Annual inspection hours 30
Direct materials cost $ 46.00 per unit
Direct labor cost $ 41.07 per unit
According to the activity-based costing system, the average cost of product Q79Y is closest to:

Multiple Choice

a.$133.30 per unit

b.$87.07 per unit

c.$129.50 per unit

d.$141.07 per unit

The average cost of product Q79Y is closest to = $ 133.30

Explanation:

Paparo Corporation

We find the total cost of material , labor and FOH using activity based costing.

Activity based Costs= Activity Cost/ Total Cost Pool * No of Cost Pools

Direct materials cost $ 46.00 per unit * 450= $ 20700

Direct labor cost $ 41.07 per unit*450= $ 18481.5

Assembly Costs =$ 831,300 /51,000 machine-hours*  1,010 hours =$ 16463

Processing orders Costs= $ 49,010 /1,300 orders *55 orders = $2073.5

Inspection Costs=  $ 98,905 /1,310 inspection-hours* 30 hours = $2265

Total Manufacturing Costs for 450 units = $ 59983

The average cost of product Q79Y is closest to = $ 59983/450=$ 133.29=

$ 133.30

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