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Westerner Manufacturing has established the following cost pools for this year:
Cost Pool
Costs
Cost Drivers
Maintenance
$20,000
10,000 machine hours
Material handling
$25,000
250 moves
Machine setup
$30,000
1,000 hours
inspection
.$25,2Q.S2
500 inspections
Total
$100,000
The following information pertains to two representative jobs completed during January:
Item
Job 101
Job 102
Direct materials
$10,000
$7,500
Direct labor
$8,000
$5,000
Units produced
2,000
1,500
Direct labor hours
640
400
Machine hours
700
650
Number of material moves
40
15
Number of setup hours
80
Number of inspections
35
Question 1: Determine the cost per unit of Job 101 using machine hours to allocate all indirect costs.
a. $5.00/mh
b. $10/mh
c. $12.50/mh
d. $14/mh
Question 2: Determine the cost driver rate under activity based costing for maintenance.
a. $2/mh
b. $4/mh
c. $5/mh
d. $8/mh
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