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Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
Activity | Cost | Cost Driver | ||||
Material handling | $ | 281,000 | Number of parts | |||
Material insertion | 3,060,000 | Number of parts | ||||
Automated machinery | 873,000 | Machine hours | ||||
Finishing | 194,000 | Direct labor hours | ||||
Packaging | 194,000 | Orders shipped | ||||
Total | $ | 4,602,000 | ||||
The following information pertains to the three product lines for next year:
Economy | Standard | Deluxe | |||||||||
Units to be produced | 14,300 | 9,700 | 2,600 | ||||||||
Orders to be shipped | 1,910 | 580 | 270 | ||||||||
Number of parts per unit | 15 | 20 | 25 | ||||||||
Machine hours per unit | 1 | 2 | 5 | ||||||||
Labor hours per unit | 3 | 3 | 3 | ||||||||
What is Barnetts pool rate for the packaging activity?
$2.29 per machine hour.
$2.43 per labor hour.
$7.03 per unit.
$70.29 per order shipped.
None of the answers is correct.
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