Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division
Activity Est. Indirect Activity
Costs Allocation base Cost allocation rate
Materials $60,000 Material moves $5.00/move
Assembling $175,000 Direct labor hours $5.00/dir. labor hour
Packaging $70,000 # of finished units $2.50/finished unit
The following units were produced in December with the following information:
Part # # Produced Materials Costs # Moves Dir. Labor Hours.
Part 001 1,250 $2,500 100 200
Part 002 3,500 $6,000 500 300
Part 003 3,750 $7,000 2,500 1,250
Total manufacturing costs for Part 002 is
A) $12,750.
B) $4,000.
C) $10,000.
D) $18,750.
D
Explanation: D)
Direct materials costs = $6,000
Overhead
Materials 500 moves × $5 = 2,500
Assembling 300 hours × $5 = 1,500
Packaging 3,500 units × $2.50 = 8,750
Total = $18,750
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