Pelder Products Company manufactures two types of engineering diagnostic equipment used in construction. The two products are based upon different technologies, X-ray and ultrasound, but are manufactured in the same factory. Pelder has computed the manufacturing cost of the X-ray and ultrasound products by adding together direct materials, direct labor, and overhead cost applied based on the number of direct labor hours. The factory has three overhead departments that support the single production line that makes both products. Budgeted overhead spending for the departments is as follows:

Pelder’s budgeted manufacturing activities and costs for the period are as follows:

The budgeted cost to manufacture one ultrasound machine using the activity-based costing method is:

a. $225.

b. $264.

c. $293.

d. $305.

Transcribed Image Text:

Department Materials Handling Total Setup Engineering Design $6,000 $5,000 $3,000 $14,000 Product Activity X-Ray Ultrasound Units produced and sold 50 100 Direct materials used $5,000 $8,000 Direct labor hours used 100 300 Direct labor cost $4,000 $12,000 Number of parts used Number of engineering changes 400 600 1 Number of product setups 8