Barnett 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 Cost Cost Driver Material handling $ 225,000 Number of parts Material insertion 2,475,000 Number of parts Automated machinery 840,000
Barnett 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 Cost Cost Driver Material handling $ 225,000 Number of parts Material insertion 2,475,000 Number of parts Automated machinery 840,000
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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Barnett 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 | Cost | Cost Driver | ||
Material handling | $ | 225,000 | Number of parts | |
Material insertion | 2,475,000 | Number of parts | ||
Automated machinery | 840,000 | Machine hours | ||
Finishing | 170,000 | Direct labor hours | ||
Packaging | 170,000 | Orders shipped | ||
Total | $ | 3,880,000 |
Economy | Standard | Deluxe | |||||||||
Units to be produced | 10,000 | 5,000 | 2,000 | ||||||||
Orders to be shipped | 1,000 | 500 | 200 | ||||||||
Number of parts per unit | 10 | 15 | 25 | ||||||||
Machine hours per unit | 1 | 3 | 5 | ||||||||
Labor hours per unit | 2 | 2 | 2 |
Group of answer choices
The following information pertains to the three product lines for next year:
Under Barnett's activity-based costing system, what is the per-unit overhead cost of Economy?
a. $4.86 per machine hour.
b. $100.00 per order shipped.
c. $5.00 per labor hour.
d. $10.00 per part.
e. None of the answers is correct.
Barnett 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 | Cost | Cost Driver | ||
Material handling | $ | 225,000 | Number of parts | |
Material insertion | 2,475,000 | Number of parts | ||
Automated machinery | 840,000 | Machine hours | ||
Finishing | 170,000 | Direct labor hours | ||
Packaging | 170,000 | Orders shipped | ||
Total | $ | 3,880,000 |
Economy | Standard | Deluxe | |||||||||
Units to be produced | 10,000 | 5,000 | 2,000 | ||||||||
Orders to be shipped | 1,000 | 500 | 200 | ||||||||
Number of parts per unit | 10 | 15 | 25 | ||||||||
Machine hours per unit | 1 | 3 | 5 | ||||||||
Labor hours per unit | 2 | 2 | 2 |
Group of answer choices
a. $228.
b. $164.
c. $225.
d. $141.
e. None of the answers is correct.
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