Krypton Ltd.’s budgeted information relating to the manufacture of two of its pr
ID: 2341938 • Letter: K
Question
Krypton Ltd.’s budgeted information relating to the manufacture of two of its products is presented below:
# of times driver used
Activity
Cost
Driver
Product A
Product B
Setup
$59254
# of batches
33
14
Engineering
$124334
# of engineering hours
6670
9695
Machine Maintenance
$91899
# of machine hours
7399
11803
Direct labour cost
$12/hour
$340084
$535802
Direct materials
$129078
$99880
What is the total cost of Product B using Activity Based Costing?
Select one:
a. $783478
b. $596853
c. $911169
d. $147796
# of times driver used
Activity
Cost
Driver
Product A
Product B
Setup
$59254
# of batches
33
14
Engineering
$124334
# of engineering hours
6670
9695
Machine Maintenance
$91899
# of machine hours
7399
11803
Direct labour cost
$12/hour
$340084
$535802
Direct materials
$129078
$99880
Explanation / Answer
Activity cost for:
Setups=$59254/(33+14)=$1260.723404/batch
Engineering=$124334/(6670+9695)=$7.597555759/engineering hour
Machine maintenance=$91899/(7399+11803)=$4.7859907718/machine hour
Hence total allocated cost for B=(1260.723404*14)+(7.597555759*9695)+(4.7859907718*11803)
=$147797.4798
Add:direct labor=$535802
Add:direct materials=$99880
Total cost=$783478(Approx).
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