ent/153363/viewContent/1490027/View Activity Cost Activity Base $72,000 No. of p

Question

ent/153363/viewContent/1490027/View Activity Cost Activity Base $72,000 No. of purchase orders Purchasing Scheduling Setup Costs Product development Production Total 4,800 No. of production orders 9,600 No. of setups 1,440 No. of engineering changes 28,400 Machine hours 116,240 No. of No. of No. of No. of Machine No. of Purch. Prod. Setups Eng. Hours Units Orders Orders Changes Blenders 4,000 Toasters 2,000 Coff. Pots 12,000 Total 100 2,000 2,824 50 8,000 5,269 250 10,000 18,143 400 20,000 26,236 00 1,400 600 800 4,000 18,000 1,250 6,000 150 30 105

Explanation / Answer

B.$8.00

the following table shows the calculation:

activity costs are allocated using the formula :

total cost of activity / total activity * activity attributed to blenders.

number of units of blenders = 2,824 units.

cost per unit = $22,592 / 2,824 =>$8 per blender.

purchasing ($72,000 / 18,000) * 4,000 $16,000 scheduling ($4,800 / 1,250)*300 $1,152 setup costs ($9600/6,000)*1400 $2,240 product development ($1440/400)* $360 production ($28,400 / 20,000)*2000 $2840 total cost allocated to blenders $22,592

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