Carpenter Corporation manufactures two products, Product A and Product B. The co
ID: 2540018 • Letter: C
Question
Carpenter Corporation manufactures two products, Product A and Product B.
The company uses an Activity Based Costing System that assigns costs based on activity cost drivers.
The following data is available:
Product A
Product B
Total
Direct Materials Cost (per unit)
$70
$140
Direct Labor Costs (per hour)
$20
$30
Supporting Labor Costs
$16,000
Utilities and Repairs Costs
$96,000
Order Processing Costs
$24,560
Direct Labor (Production) Hours (per unit)
2
3
Production Units
2,400
800
Supporting Labor (hours)
600
200
Customer Orders
48
32
Compute the Total Manufacturing Costs for Product A using the Activity Based Costing System.
Product A
Product B
Total
Direct Materials Cost (per unit)
$70
$140
Direct Labor Costs (per hour)
$20
$30
Supporting Labor Costs
$16,000
Utilities and Repairs Costs
$96,000
Order Processing Costs
$24,560
Direct Labor (Production) Hours (per unit)
2
3
Production Units
2,400
800
Supporting Labor (hours)
600
200
Customer Orders
48
32
Explanation / Answer
The correct answer is $ 354,736
Note:
2.
3.
4.
5. Total Diret Labor Hours =
Product A = 2,400 Units * 2 Per Unit
= 4,800
Product B = 800 Units * 3 Per Unit
= 2,400
Total = 4,800 +2,400
= 7,200 Hours
Overhead Costs Cost Drivers Activity Total ( A+ B) Activity Rate ( Cost / Activity Total) Supporting Labor Costs 16,000 Supporting Labor (hours) 800 20 Utilities and Repairs Costs 96,000 Total Direct Labor Hours 7200 13.33333333 Order Processing Costs 24,560 Customer Orders 80 307Related Questions
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