Question
the Pinewood Furniture Company Pty Ltd plans to manufacture two lines of chairs in the coming yearlounge and patio. The company is considering introducing an
the Pinewood Furniture Company Pty Ltd plans to manufacture two lines of chairs in the coming yearlounge and patio. The company is considering introducing an activity-based costing system. Given below are each activity, its cost and its related activity driver.
Activity
Cost
Activity Driver
Material setups
300 000
Number of setups
Material handling
250 000
Number of parts
Cutting
700 000
Number of parts
Assembly
600 000
Direct labour hours
Finishing
450 000
Number of units
The level of activity for the year is:
Lounge
Patio
Units to be produced
10 000
5000
Number of setups
60
60
Number of parts per unit
10
5
Direct labour hours per unit
5
2
Under an activity-based costing system, what is the total cost of patio chairs for the year?
A. $1 710 000
B. $1 150 000
C. $890 600
D. $590 000
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Corporate Financial Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
12th edition
1305041399, 1285078586, 978-1-133-9524, 9781133952428, 978-1305041394, 9781285078588, 1-133-95241-0, 978-1133952411
