Determine the cost driver rate under activity based costing

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Reference no: EM132483994

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

40

Number of inspections

35

15

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

Reference no: EM132483994

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