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3. Rulers Inc is a manufacturer of rulers. The company has always used a plant-wide rate for allocating manufacturing overhead to its products. The allocation
3. Rulers Inc is a manufacturer of rulers. The company has always used a plant-wide rate for allocating manufacturing overhead to its products. The allocation method was based on direct manufacturing labour hours, and the rate was $150 per labour hour. The plant manager believes it is time to change to an ABC approach. The accounting department has established new relationships between production activities and manufacturing overhead as follows: Activity Materials handling Assembly Inspection Cost driver Number of parts Labour hours Inspection time Allocation rate $4 per part $40 per hour $6 per minute What are the indirect manufacturing costs per unit of a batch of 100 pairs of scissors, assuming that ABC is used? The batch requires 200 parts, 12 direct manufacturing labour hours and five minutes of inspection time. (Show your work for full marks)
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