Department Engineering Design Materials Handling Setup Total $6,000 $5,000 $3,000 $14,000 Product Activity Units produced and sold X-Ray Ultrasound 50 100 Direct materials used $5,000 $8,000 Direct labor hours used 100 300 Direct labor cost $4,000 $12,000 Number of parts used Number of engineering changes Number of product setups 400 600 2 1 8 7
Pelder Products Company manufactures two types of engineering
diagnostic equipment used in construction. The two products are based
upon different technologies, X-ray and ultrasound, but are
manufactured in the same factory. Pelder has computed the
manufacturing cost of X-ray and ultrasound products by adding
together direct materials, direct labor, and overhead cost applied based
on the number of direct labor hours. The factory has three overhead
departments that support the single production line that makes both
products. Budgeted overhead spending for the departments is as follows:
Pleder's budgeted manufacturing activities and costs for the period are
as follows:
The budgeted cost to manufacture one ultrasound machine using the
activity based costing method is:
a. $225
b. $264
c. $293
d. $305
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