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What is the activity cost per unit of activity driver

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Reference no: EM132552742

The Pinewood Furniture Company Pty Ltd plans to manufacture two lines of chairs in the coming year - lounge and patio. The company is considering introducing an activity-based costing system. Given below are each activity, its cost and its related activity driver.

Activity          Cost   Activity Driver     Material

Setups 300,000

Number of setups

Material handling250,000

Number of partsCutting700,000

Number of partsAssembly 600,000

Direct labour hoursFinishing 450,000 Number of units

The level of activity for the year is:

                                                   Lounge                 Patio

Units to be produced               10,000             5,000

Number of Setups                   60                      60

Number of parts per unit              105

Direct Labour Hours per unit 52

Question 1: Under an activity-based costing system, what is the activity cost per unit of activity driver for material handling?

Select one:

a. $2.00 per part

b. $16.67 per part

c. $2.50 per part

d. $ 5.00 per part

e. $ 4.17 per direct labour hour

Reference no: EM132552742

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