34. Durable Engines Company uses ABC to account for it manufacturing process Act

Question

34. Durable Engines Company uses ABC to account for it manufacturing process Activities Materials handlin Machine setu Assemblin Packagiin Indirect activity budget 36,000 19,200 6,000 12,800 Allocation base (cost driver Based on number of parts Based on number of setups Based on number of parts Based on number of finished units Durable Engines Company expects to produce 2,000 engines. Durable Engines Company alseo expects to use 12,000 parts and have 16 setups The allocation rate for materials handling will be: A. S 5.28 B. 6.40 C. S 3.00 D. $18.00

Explanation / Answer

Answer is C. $3.00 The allocation rate for material handling will be = Total Activity Cost/Total Number of units for activity = Material handling cost/No of parts = $36,000/12,000 = $3.00

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