Question
BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified
BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
|
| Budgeted |
Activity | Cost Driver | Costs |
Parts handling | Number of parts | $ 90,000 |
Parts insertion | Number of parts | 990,000 |
Automated processing | Machine hours | 336,000 |
Testing | Labor hours | 68,000 |
Packaging | Orders shipped | 68,000 |
Total indirect manufacturing cost |
| $1,552,000 |
The following information relates to each size of monitor and next year's anticipated manufacturing operations:
| 20-inch | 17-inch | 15-inch |
Units to be produced | 2,000 | 3,000 | 5,000 |
Orders to be shipped | 200 | 500 | 800 |
Number of parts per unit | 30 | 20 | 10 |
Machine hours per unit | 4 | 2 | 1 |
Labor hours per unit | 2 | 2 | 2 |
What is BigView's cost per cost driver for testing for next year (rounded)?
|
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