QUESTION 9

Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

Activity	Cost			Cost Driver
Material handling	$	278,000			Number of parts
Material insertion		3,450,000			Number of parts
Automated machinery		868,000			Machine hours
Finishing		237,000			Direct labor hours
Packaging		237,000			Orders shipped
Total	$	5,070,000

The following information pertains to the three product lines for next year:

	Economy				Standard				Deluxe
Units to be produced		19,200				3,100				2,700
Orders to be shipped		1,620				930				250
Number of parts per unit		5				10				15
Machine hours per unit		1				2				5
Labor hours per unit		2				2				2

What is Barnetts pool rate for the automated machinery activity?

Multiple Choice

• $22.31 per machine hour.

• $22.81 per labor hour.

• $51.42 per unit.

• $54.00 per machine hour.

• None of the answers is correct.