iabama Paper Company manufactures three preducts (computer pages, newspnd, and s

Question

iabama Paper Company manufactures three preducts (computer pages, newspnd, and specialty peper) in a contin dentifed the amount of factory overhead required by the critical ativities of the organiration as tollows peuctien process Seior management asked the coneroiler to cofuct an activty besed cosing study The cantroter Produdt Engineering The prtivity baves identified for sach activity are as foilos Activity Base Produt Engneen Number of test u and units profuced for the three Computer Paper 0 7,375 Specialty Paper i. Determine the activity ete for each activity 3 per machi Oe

Explanation / Answer

Solution:

Determination of activity rate for each activity Activity Budgeted activity cost Activity Base Usage of Activity Base Activity Rate Production $448,900 Machine hours 6700 $67 Setup $131,400 Number of Setups 300 $438 Moving $129,000 Number of moves 1500 $86 Shipping $140,000 Number of customer orders 4000 $35 Product Engineering $84,700 Number of test run 700 $121

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