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How materials handling costs will be allocated to products

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Reference no: EM132501314

Chinchilla, Inc. uses activity-based costing. The company produces X and Y. Information relating to the two products is as follows:

                                                            X                               Y

Units produced                                   38,000                          50,000

Machine-hours                                      15,000                  17,000

Direct labor-hours                                  16,000                   24,000

Materials handling (number of moves)           8,000                   12,000

Setups                                                 10,000                   14,000

The following cost pools have been identified:

Activity

Cost driverTotal cost

Materials handling

Number of moves                 $320,000

Labor-related overhead

Direct labor hours                    $560,000

Setups

Number of setups                       $480,000

Question 1: Materials handling costs will be allocated to products at the rate of:

$57 per setup

$136 per setup

$48 per setup

$16 per setup

Reference no: EM132501314

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