US CMA Part 1 · Chapter 4 · Question 13 of 22
A plant uses activity-based costing with two overhead pools: machine setups ($180,000, 300 setups) and quality inspections ($96,000, 1,200 inspections). Product Z required 40 setups and 150 inspections to produce 2,000 units. What overhead cost per unit is assigned to Product Z?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $18.00
Explanation
Activity rates: setups $180,000 / 300 = $600 per setup; inspections $96,000 / 1,200 = $80 per inspection. Overhead for Z = 40 x $600 + 150 x $80 = $24,000 + $12,000 = $36,000. Per unit = $36,000 / 2,000 = $18.00.
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