Question
Company has identified the following activities related to indirect production costs: ACTIVITY ACTIVITY COSTS COST DRIVERS Machine Setup $100,000 400 setup hours Materials Handling $54,000
Company has identified the following activities related to indirect production costs:
| ACTIVITY | ACTIVITY COSTS | COST DRIVERS |
| Machine Setup | $100,000 | 400 setup hours |
| Materials Handling | $54,000 | 18,000 pounds of materials |
| Electric Power | $30,000 | 15,000 kilowatt hours |
Company has obtained the following data concerning two products:
|
| PRODUCT 1 | PRODUCT 2 |
| Number of units produced | 2,000 | 10,000 |
| Direct materials cost | $5,000 | $8,000 |
| Direct labor cost | $10,000 | $15,000 |
| Number of setup hours | 10 | 5 |
| Pounds of materials used | 1,000 | 500 |
| Kilowatt-hours | 1,000 | 1,000 |
Using activity-based costing, what amount of machine setup cost is assigned to Products 1 and 2?
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Rockford Practice Set To Accompany Intermediate Accounting
Authors: Donald E. Kieso
16th Edition
1119287936, 9781119287933
