Compute the activity cost rates for materials handling

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Description

Compute the activity cost rates for materials handling, assembly, and design based on the data that follows.
Materials:
Cloth-$26,000
Fasteners-4,000
Purchased handling-40,000
Material handling:
Labor-8,000
Equipment depreciation-5,000
Electrical power-2,000
Maintenance-6,000
Assembly:
Machine operators-5,000
Design:
Labor-5,000
Electrical power-1,000
Overhead-8,000

Output totaled 40,000 units. Each unit requires three machine hours of effort. Materials handling costs are allocated to the products based on direct materials cost. Design costs are allocated based on units produced. Assembly costs are allocated based on 500 machine operator hours. (Hint: Activity cost rate = Total activity costs divided total allocation base. Examples of an allocation base include total dollars of materials, total machine operator hours, or total unit of output.)

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