HITech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Material handling Material insertion Automated machinery Finishing Packaging Total Cost $ 225,000 2,475,000 840,000 170,000 Cost Driver Number of parts Number of parts Machine hours Direct labor hours Orders shipped 170.000 $3,880,000 The following information pertains to the three product lines for next year: Economy 10,000 1,000 Standard 5,000 500 Deluxe 2,000 200 Units to be produced Orders to be shipped Number of parts per unit Machine hours per unit Labor hours per unit 25 5 10 1 2 15 3 2 Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Standard product line is closest to:
HITech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Material handling Material insertion Automated machinery Finishing Packaging Total Cost $ 225,000 2,475,000 840,000 170,000 Cost Driver Number of parts Number of parts Machine hours Direct labor hours Orders shipped 170.000 $3,880,000 The following information pertains to the three product lines for next year: Economy 10,000 1,000 Standard 5,000 500 Deluxe 2,000 200 Units to be produced Orders to be shipped Number of parts per unit Machine hours per unit Labor hours per unit 25 5 10 1 2 15 3 2 Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Standard product line is closest to:
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...
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