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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 | $ | 225,000 | Number of parts | |
Material insertion | 2,475,000 | Number of parts | ||
Automated machinery | 840,000 | Machine hours | ||
Finishing | 170,000 | Direct labor hours | ||
Packaging | 170,000 | Orders shipped | ||
Total | $ | 3,880,000 | ||
The following information pertains to the three product lines for next year:
Economy | Standard | Deluxe | |||||||||
Units to be produced | 10,000 | 5,000 | 2,000 | ||||||||
Orders to be shipped | 1,000 | 500 | 200 | ||||||||
Number of parts per unit | 10 | 15 | 25 | ||||||||
Machine hours per unit | 1 | 3 | 5 | ||||||||
Labor hours per unit | 2 | 2 | 2 | ||||||||
What is Barnetts pool rate for the finishing activity?
Multiple Choice
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$5.00 per labor hour.
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$5.00 per machine hour.
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$5.00 per unit.
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$7.50 per unit.
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None of the answers is correct.
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