Stage 2 ABC for Manufacturing: Reassigning Costs to Cost Objectives

National Technology,LTD. has developed the following activity cost information for its manufacturing activities:

ActivityActivity costMachine setup$ 65.00per batchMovement15.00per batch move0.10per poundDrilling4.00per holeWelding4.00per inchShaping25.00per hourAssembly17.00per hourInspection2.00per unit

Filling an order for a batch of 50 fireplace inserts (each insert weighing150 pounds)required the following:

• Three batch moves
• Two sets of inspections
• Drilling five holes in each unit
• Completing 80 inches of welds on each unit
• Thirty minutes of shaping for each unit
• One hour of assembly per unit

Determine the activity cost of converting the raw materials into 50 fireplace inserts. $Answer

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