Concept explainers
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April. 50 range instruments and 300 pressure gauges were produced, and
Activities | Cost Drivers | Total Cost | |
1. | Materials handling | Number of requisitions | $40,000 |
2. | Machine setups | Number of setups | 21,500 |
3. | Quality inspections | Number of inspections | 33,000 |
$94,500 |
The cost driver volume for each product was as follows.
Cost Drivers | Instruments | Gauges | Total |
Number of requisitions | 400 | 600 | 1,000 |
Number of setups | 200 | 300 | 500 |
Number of inspections | 200 | 400 | 600 |
Instructions
(a) Determine the overhead rate for each activity.
(b) Assign the
(c) - Write a memorandum to the president of Air United explaining the benefits of activity-based costing.
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