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
Answer: C