Question
A box-making company produces cardboard boxes to sell to other companies. The company uses an activity costing system. The activities that are carried out in
A box-making company produces cardboard boxes to sell to other companies. The company uses an activity costing system.
The activities that are carried out in the production process, their budgeted indirect costs and their respective activity drivers are mentioned below:
| Activities | Budgeted Indirect Costs | Activity Drivers | Budgeted Activity Levels |
| Material Handling | $15,000 | Number of Movements | 1,000 movements |
| Machin Start-Up | $20,000 | Number of Start-Ups | 500 Starts |
| Inspections | $40,000 | Number of Inspections | 4,000 Inspections |
| Total | $75,000 |
In that month 20,000 boxes were produced, where the following activities were carried out:
Material Handling: 340 movements
Machin Start-Up: 200 Starts
Inspections: 1,500 inspections
During that same month, the direct raw material used for the production raised to $100,000 y the direct labor cost was $90,000.
The material start rate is:
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Corporate Financial Reporting In A Competitive Economy (RLE Accounting)
Authors: Herman W. Bevis
1st Edition
1138966819, 9781138966819
