Wright Ltd uses an Activity-based Costing (ABC) system to manufacture tractor metal parts. The following budget information relates to Wright Ltd for next year: Activity Activity Cost pool (£) Activity Cost driver Annual number of activity cost drivers Operating machinery 660,000 Machine hours 110,000 Maintaining machinery 80,000 Maintenance hour 1,600 Setting-up machinery 256,000 Machinery set-up 8,000 Purchasing materials 59,850 Purchase order 450 Controlling quality 104,500 Quality inspection 5,500 Total 1,160,350 An order from a customer for 80,000 units of parts caused 14,500 hours of machining, 22 maintenance hours, 20 machinery set-ups, 35 purchase orders, and 12 quality inspections. The order used £50,000 of materials and £65,000 of direct labour. The cost driver rate per activity is? a. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality c) 6 50 18 50 18 b. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality d) 6 50 32 133 19 c. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality a) 8 30 1 13 15 d. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality b) 7 40 11 80 16
Wright Ltd uses an Activity-based Costing (ABC) system to manufacture tractor metal parts. The following budget information relates to Wright Ltd for next year: Activity Activity Cost pool (£) Activity Cost driver Annual number of activity cost drivers Operating machinery 660,000 Machine hours 110,000 Maintaining machinery 80,000 Maintenance hour 1,600 Setting-up machinery 256,000 Machinery set-up 8,000 Purchasing materials 59,850 Purchase order 450 Controlling quality 104,500 Quality inspection 5,500 Total 1,160,350 An order from a customer for 80,000 units of parts caused 14,500 hours of machining, 22 maintenance hours, 20 machinery set-ups, 35 purchase orders, and 12 quality inspections. The order used £50,000 of materials and £65,000 of direct labour. The cost driver rate per activity is? a. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality c) 6 50 18 50 18 b. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality d) 6 50 32 133 19 c. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality a) 8 30 1 13 15 d. Operating machinery Maintaining machinery Setting-up machinery Purchasing materials Controlling quality b) 7 40 11 80 16
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...
Related questions
Question
Wright Ltd uses an Activity-based Costing (ABC) system to manufacture tractor metal parts. The following budget
information relates to Wright Ltd for next year:
Activity | Activity Cost pool (£) | Activity Cost driver | Annual number of activity cost drivers |
Operating machinery | 660,000 | Machine hours | 110,000 |
Maintaining machinery | 80,000 | Maintenance hour | 1,600 |
Setting-up machinery | 256,000 | Machinery set-up | 8,000 |
Purchasing materials | 59,850 | Purchase order | 450 |
Controlling quality | 104,500 | Quality inspection | 5,500 |
Total | 1,160,350 |
An order from a customer for 80,000 units of parts caused 14,500 hours of machining, 22 maintenance hours, 20 machinery set-ups, 35 purchase orders, and 12 quality inspections. The order used £50,000 of materials and £65,000 of direct labour.
The cost driver rate per activity is?
a. |
|
|||||||||||||
b. |
|
|||||||||||||
c. |
|
|||||||||||||
d. |
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning