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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:
Proximity
Reflex
4,500
3,000
700
800
1,500
1,000
Required - Calculate the indirect activity cost rate for each activity using Activity-Based Costing (ABC). Show all calculations.
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