Beartowne Enterprises uses an activityminusbased costing system to assign costs in its autominusparts division. Activity Est. Indirect Activity Costs Allocation base Cost allocation rate
Materials $55,000 Material moves $3.00/move
Assembling $195,000 Machine hours $6.00/machine hour
Packaging $70,000 # of finished units $3.50/finished unit

The following units were produced in December with the following information. The company incurs no direct labor costs.

Part # # Produced Materials Costs # Moves Machine Hrs.
Part 001 1,450 $1,500 300 500
Part 002 5,500 $4,000 500 300
Part 003 3,950 $8,000 2,300 1,650

Total manufacturing costs for Part 003 is:

Total manufacturing costs for Part 003 is:  $ 38625

Explanation:

Beartowne Enterprises

Activity Based Costing

We multiply the rate of of each activity with allocation base to get the indirect activity costs.

Total manufacturing costs for Part 003 is:

Materials Costs $ 8,000

Materials handling  = 2,300 moves *$3.00/move= $ 6900

Assembling = 1,650 machine hours * $ 6.0= $ 9900

Packaging =  3,950 units * $3.50/finished unit = $ 13825

Total Manufacturing Costs $ 38625

Given Data

Part #      # Produced      Materials Costs       # Moves      Machine Hrs.

Part 001         1,450                $1,500                    300             500

Part 002        5,500               $4,000                      500             300

Part 003         3,950               $8,000                  2,300              1,650

Activity .        Indirect Activity       Allocation    Cost allocation rate

Est                   Costs                          base

Materials      $55,000             Material moves         $3.00/move

Assembling $195,000             Machine hours        $6.00/machine hour

Packaging       $70,000           # of finished units     $3.50/finished unit