The overhead applied to each unit of Product H9 under activity-based costing is closest to:

A) $1,139.60 per unit
B) $1,078.98 per unit
C) $610.09 per unit
D) $1,025.67 per unit

The overhead costs for each activity are as follows:
Machining: $170,000
Material handling: $120,000
Setup: $200,000
Other overhead: $70,000
Total overhead: $560,000

Calculate the activity rates as follows:
Machining: $170,000/10,000 machine hours = $17/machine hour
Material handling: $120,000/8,000 material moves = $15/material move
Setup: $200,000/400 setups = $500/setup
Other overhead: $70,000/4,000 direct labor hours = $17.50/direct labor hour

Calculate the overhead applied to each unit of Product H9 as follows:
Activity Costs per Unit:
Machining: 0.5 machine hours x $17/machine hour = $8.50
Material handling: 8 material moves x $15/material move = $120
Setup: 2 setups x $500/setup = $1,000
Other overhead: 12 direct labor hours x $17.50/direct labor hour = $210
Total activity costs per unit = $1,338.50

Therefore, the overhead applied to each unit of Product H9 under activity-based costing is $1,338.50 - $260 (direct materials and direct labor) = $1,078.50 per unit. Closest option is B which is $1,078.98.

Computation of activity rates: Computation of the overhead cost per unit under activity-based costing. Reference: CH04-Ref7
Abbe Company uses activity-based costing.The company has two products: A and B.The annual production and sales of Product A is 800 units and of Product B is 600 units.There are three activity cost pools, with estimated costs and expected activity as follows: