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Miramar Industries manufactures two products: A and B.The manufacturing operation involves three overhead activitiesproduction setup, material handling, and general factoryactivities.Miramaruses activity-based costing to allocate overhead
Miramar Industries manufactures two products: A and B.The manufacturing operation involves three overhead activitiesproduction setup, material handling, and general factoryactivities.Miramaruses activity-based costing to allocate overhead to products.An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
Activity | Cost | Activity Base |
Production setup | $250,000 | Number of setups |
Material handling | 150,000 | Number of parts |
General overhead | 80,000 | Number of direct labor hours |
Each products total activity in each of the three areas are as follows:
Product A | Product B | |
Number of setups | 100 | 300 |
Number of parts | 40,000 | 20,000 |
Number of direct labor hours | 8,000 | 12,000 |
a. | $292,500 |
b. | $285,500 |
c. | $175,000 |
d. | $135,000 |
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