A corporation reported the following information: Compute the shipment costs to

Question

A corporation reported the following information:

Compute the shipment costs to be allocated to a product line of 50,000 units shipped in batches of 1,000 each.

A. $0.40

B. $1.20

C. $30,000

D. $400

E. $20,000

Budgeted Quantity Total Budgeted of Cost-Allocation Cost Hierarchy IndirectBase Categorv Costs Product S350,000 Sustaining Budgeted Indirect Cost Rate Activity 2Design 80 parts- ?per part-square square foot feet 3Machine Output unit-level S585,000 10,000 productionper production machine-hour Operations machine- hours 4 Shipment Batch- $60,000 150shipments ?per shipment Setup level 5 Administration S225,00025,000Direct ?per direct manuf. labor- manuI labor hours hour

Explanation / Answer

activity rate = 60000/150 400 per shipment no of shipments for 50000 units = 50000/1000 = 50 shipments cost = 50*400 20000 option e is the correct answer

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