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Activity Activity Cost Cost Drivers Machine Setup $180,000 1,500 Setup Hours Materials Handling $50,000 12,500 Pounds of Materials Electric Power $20,000 20,000 Kilo-watts hours Product
Activity Activity Cost Cost Drivers
Machine Setup $180,000 1,500 Setup Hours
Materials Handling $50,000 12,500 Pounds of Materials
Electric Power $20,000 20,000 Kilo-watts hours
Product A Product B
Number of units produced 4,000 20,000
Direct materials cost $20,000 $25,000
Direct labor cost $12,000 $20,000
Number of setup hours $100 $120
Pounds of material used $500 $1,500
Kilo-watt hours $1,000 $2,000
Using activity-based costing, how much of the machine setup cost will be assigned to Product B?
A.$14,400
B.$15,000
C.$14,000
D.$12,000
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