Answer (A) is correct . The first step in performing an activity-based costing assignment is to divide the dollar amount of the indirect cost activity in question by the number of units of the appropriate allocation base. Total receiving costs for both products amounted to $450,000. Between them, Products A and B had 200 (50 + 150) receiving orders. Thus, the allocation rate is $2,250 per order ($450,000 ¡Â 200 orders). The amount allocated to Product A is $112,500 (50 orders ¡Á $2,250). Dividing this amount by the number of units of Product A (30,000) results in a per-unit receiving cost of $3.75.Answer (B) is incorrect because The amount of $10.75 is the total per-unit assigned indirect cost for Product A, not just receiving cost.
Answer (C) is incorrect because The amount of $19.50 results from simply dividing the total budgeted overhead by half the budgeted machine hours.
Answer (D) is incorrect because The amount of $28.13 is the per-unit receiving cost for Product B.
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Using activity-based costing, Atmel’s per unit overhead cost allocation of receiving costs for Product A is