A company has developed the following activity cost information for its manufact

Question

A company has developed the following activity cost information for its manufacturing activities:

Machine setup: $40 per batch

Movement: $15 per batch move, .10 per pound

Drilling: $3 per hole

Welding: $4 per inch

Shaping: $25 per hour

Assembly: $15 per hour

Inspection: $2 per unit

Filling an order for a batch of 50 fireplace inserts (each insert weighing 150 pounds) required the following:

3 batch moves

2 sets of inspections

Drilling 5 holes in each unit

Completing 50 inches of welds on each unit

30 minutes of shaping for each unit

1 hour of assembly per unit

Determine the activity cost of converting the raw materials into 50 fireplace inserts.

Explanation / Answer

Cost Quantity Amount Machine Set up 1 40 Movement 3 45 Drilling 250 750 Welding 2500 10000 Shaping 25 625 Assembly 50 750 Inspection 100 200 Total 12410

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