Using Activity Based Costing, what is the overhead cost per unit of the product?

The budgeted overheads of Nambro for the next year have beenanalyzedas follows:

$000

Purchase order processing costs450

Production run set up costs180

Machine running costs640

In the next year, it is anticipated that machines will run for 32,000 hours, 6,000 purchase orders will be processed and there will be 450 production runs.

One of the company’s products is produced in batches of 500. Each batch requires a separate production run, 30 purchase orders and 750 machine hours.

Using Activity Based Costing, what is the overhead cost per unit of the product?
A . $0.99
B . $1.59
C . $35.30
D . $495.00

View Answer

Answer: C