Watson's Computer Company uses ABC to account for its manufacturing process. Indirect activity Activities Allocation base (cost driver) budget Materials $52,000 Based on the number of parts handling Machine setup $30,000 Based on the number of setups Assembling $9,750 Based on the number of parts Packaging $15,300 Based on the number of finished units Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for packaging is: a. $4 b. $6.80 c. $13.33 d. $7.01

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
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Watson's Computer Company uses ABC to account for its manufacturing process.
Indirect
activity
Activities
Allocation base (cost driver)
budget
Materials
$52,000
Based on the number of parts
handling
Machine setup
$30,000
Based on the number of setups
Assembling
$9,750
Based on the number of parts
Packaging
$15,300
Based on the number of finished
units
Watson's Computer Company expects to produce 2,250 computers. Watson's
Computer Company also expects to use 13,000 parts and have 20 setups.
The allocation rate for packaging is:
a. $4
b. $6.80
c. $13.33
d. $7.01
Transcribed Image Text:Watson's Computer Company uses ABC to account for its manufacturing process. Indirect activity Activities Allocation base (cost driver) budget Materials $52,000 Based on the number of parts handling Machine setup $30,000 Based on the number of setups Assembling $9,750 Based on the number of parts Packaging $15,300 Based on the number of finished units Watson's Computer Company expects to produce 2,250 computers. Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for packaging is: a. $4 b. $6.80 c. $13.33 d. $7.01
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