FIN Question 13

Durable Engines Company uses ABC to account for it manufacturing process.

Activities	Indirect activity budget	Allocation base (cost driver)
Materials handling	$ 36,000	Based on number of parts
Machine setup	$ 19,200	Based on number of setups
Assembling	$ 6,000	Based on number of parts
Packaging	$ 12,800	Based on number of finished units

Durable Engines Company expects to produce 2,000 engines. Durable Engines Company also expects to use 12,000 parts and have 16 setups. The allocation rate for materials handling will be:

		$3.00.
		$18.00.
		$5.28.
		$6.40.