XYZ Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended...

XYZ Company manufactures and distributes two products, M and XY. Overhead costs are currently allocated using the number of units produced as the allocation base. The controller has recommended changing to an activity-based costing (ABC) system. She has collected the following information:

Activity

Cost Driver

Amount

M

XY

Production setups

Number of setups

$

82,000

8

12

Material handling

Number of parts

48,000

56

24

Packaging costs

Number of units

130,000

50,000

80,000

$

260,000

What is the total overhead per unit allocated to Product M using activity-based costing (ABC)?

Select one:
a. none of the given answer.
b. $2.33.
c. $1.79.
d. $1.83.
e. $2.27.