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:
Chapter1: Financial Statements And Business Decisions
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
Transcribed Image Text: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
Cost
$ 225,000
Cost Driver
Number of parts
Number of parts
Automated machinery
Finishing
Packaging
Total
2,475,000
840,000
170,000
170.000
$3,880,000
Machine hours
Direet labor hours
Orders shipped
The following information pertains to the three product lines for next year:
Economy
10,000
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
1,000
10
15
25
1
3
5
2
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:
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