Question
Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates: Activity Cost Driver
Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:
Activity | Cost Driver | Cost Allocation Rate |
Machine setup | Number of setups | $50.00 |
Materials handling | Number of parts | 0.50 |
Machining | Machine hours | 13.00 |
Assembly | Direct labor hours | 22.00 |
Inspection | Number of finished units | 14.00 |
During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit. What is the total manufacturing cost for machine setups?
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