Calculate the indirect activity cost rate for each activity

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Question - Proxi Analytics Ltd manufactures two types of sensors - Proximity and Reflex. During 2021, 150 Proximity and 100 Reflex sensors were manufactured.

Indirect production costs incurred were $150,000.

Indirect costs and activities were the following:

Activity

Cost Driver

Amount ($)

Trimming

Number of machine hours

$75,000

Final Assembly

Number of components

$45,000

Pre-shipment inspection

Number of inspections

$30,000

TOTAL

 

$150,000

The cost driver volumes for each sensor were the following:

Cost Driver

Proximity

Reflex

Number of machine hours

4,500

3,000

Number of components

700

800

Number of inspections

1,500

1,000

Required - Calculate the indirect activity cost rate for each activity using Activity-Based Costing (ABC). Show all calculations.

Reference no: EM133067126

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