the following activities relating to indirect production costs: Activity Activit
ID: 2506530 • Letter: T
Question
the following activities relating to indirect production costs:
Activity Activity Costs Cost Drivers
Machine Setup $180,000 1,500 setup hours
Materials Handling $50,000 12,500 pounds of materials
Electric Power $20,000 20,000 kilowatt hours
Company has obtained the following data concerning two products:
Products
Speedy1 Speedy2
Number of units produced 4,000 20,000
Direct materials cost $20,000 $25,000
Direct labor cost $12,000 $20,000
Number of setup hours 100 120
Pounds of materials used 500 1,500
Kilowatt-hours 1,000 2,000
Required:
Using the activity-based costing approach, calculate the manufacturing cost per unit for Speedy1 and Speedy2.
Explanation / Answer
Activity Activity Costs Cost Drivers Cost rate per cost driver
Machine Setup $180,000 1,500 setup hours $120
Materials Handling $50,000 12,500 pounds of materials $4
Electric Power $20,000 20,000 kilowatt hours $1
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