Solution-Compute the cost allocation rate for each activity

Compute the cost allocation rate for each activity

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Reference no: EM13552405

Product costing in an activity-based costing system

Turbo Champs, Corp., uses activity-based costing to account for its motorcycle manufacturing process. Company managers have identified three supporting manufacturing activities: inspection, machine setup, and machine maintenance. The budgeted activity costs for 2012 and their allocation bases are as follows:

Activity	Total Budgeted Cost	Allocation Base
Inspection	$ 6,000	Number of inspections
Machine setup	32,000	Number of setups
Machine maintenance	5,000	Maintenance hours
Total	$ 43,000

Turbo Champs expects to produce 20 custom-built motorcycles for the year. The motorcycles are expected to require 100 inspections, 20 setups, and 100 maintenance hours.

Requirements

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each motorcycle.

Reference no: EM13552405

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Compute the cost allocation rate for each activity

Reference no: EM13552405

Reference no: EM13552405

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