Stage 2 ABC for Manufacturing: Reassigning Costs to Cost Objects National Techno
ID: 2468741 • Letter: S
Question
Stage 2 ABC for Manufacturing: Reassigning Costs to Cost Objects
National Technology, LTD. Has developed the following activity cost information for its manufacturing activities:
Activity
Activity Cost
Machine setup
$65.00 per batch
Movement
15.00 per batch move
0.10 per pound
Drilling
4.00 per hole
Welding
4.00 per hour
Shaping
25.00 per hour
Assembly
17.00 per hour
Inspection
2.00 per unit
Filling an order for a batch of 50 fireplace inserts that weighed 150 pounds each required the following:
Three batch moves
Two sets of inspections
Drilling five holes in each unit
Completing 80 inches of welds in each unit
Thirty minutes of shaping for each unit
One hour of assembly per unit
Required:
Determine the activity cost of converting the raw materials into 50 fireplace inserts.
Activity
Activity Cost
Machine setup
$65.00 per batch
Movement
15.00 per batch move
0.10 per pound
Drilling
4.00 per hole
Welding
4.00 per hour
Shaping
25.00 per hour
Assembly
17.00 per hour
Inspection
2.00 per unit
Explanation / Answer
Activity Calculation Amount in $ Remarks Machine setup 65 $ 65.00 Nothing mentioned about number of batches so it is assumed it as one batch to make 50 units Movement 3*15 $ 45.00 Movement 150*50*0.10 $ 750.00 Drilling 50*5*4 $ 1,000.00 Welding 4*80*50 $ 16,000.00 It seems that it is wrongly mentioned as $4 per hour instead of $4 per inches. So here calculation done as per $4 per inches Shaping 25*(30/60)*50 $ 625.00 Assembly 17*1*50 $ 850.00 Inspection 2*50*2 $ 200.00 activity cost of converting the raw materials into 50 fireplace inserts $ 19,535.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.