Northington,Inc., manufactures small parts and uses an activity-based costing sy

Question

Northington,Inc., manufactures small parts and uses an activity-based costing system.

Northington provides the following data:

Estimated Indirect Cost

Allocation

Activity Activity Costs Allocation Base Rate

Materials handling $ 50,000 Material moves $1.50/move

Assembling 200,000 Direct labor hours 6.00/hour

Packaging 75,000 Number of finished units .60/unit

Three different parts were produced in October. The following information is available:

Direct Direct

Number Materials Material Labor

Part Produced Costs Moves Hours

A 2,000 $ 2,000 1,000 150

B 3,000 6,000 1,500 500

C 4,000 10,000 2,000 1,200

Compute the total manufacturing costs and the unit costfor each of the three parts forthe

month of October.

Explanation / Answer

Hi,

Please find the answer as follows:

A
Total Unit Direct Materials 2000 1 Materials Handling 1500 0.75 Assembling 900 0.45 Packaging 1200 0.6 Total 5600 2.8


B
Total Unit Direct Materials 6000 2 Materials Handling 2250 0.75 Assembling 3000 1 Packaging 1800 0.6 Total 13050 4.35


C
Total Unit Direct Materials 10000 2.5 Materials Handling 3000 0.75 Assembling 7200 1.8 Packaging 2400 0.6 Total 22600 5.65

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