Reassigning Costs to Cost Objectives Regal Products has developed the following
ID: 2464092 • Letter: R
Question
Reassigning Costs to Cost Objectives
Regal Products has developed the following activity cost information for its manufacturing activities:
Filling an order for a batch of 50 fireplace inserts (each insert weighing 150 pounds) required the following:
Three batch moves
Two sets of inspections
Drilling five holes in each unit
Completing 70 inches of welds on each unit
Thirty minutes of shaping for each unit
One hour of assembly per unit
Determine the activity cost of converting the raw materials into 50 fireplace inserts.
Activity Activity cost Machine setup $40.00 per batch Movement 15.00 per batch move 0.10 per pound Drilling 2.00 per hole Welding 3.00 per inch Shaping 25.00 per hour Assembly 19.00 per hour Inspection 2.00 per unitExplanation / Answer
Activity Activity rate Number of units for each Activity performed Activity cost Calculation Units of activity $ Machine set up $40 per batch as given 3 120 Movement $15 per batch as given 3 45 $0.10 per pound 50x 150 7500 750 Drilling $2 per hole 5x 50 250 500 Welding $3 per inch 70x50 3500 10500 Shaping $25 per hour 0.5 x 50 25 625 Assembly $19 per hour number of units 50 950 Inspection $2 per unit 2x50 100 200 Total cost 13690
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