Question

OP Technologies Manufacturing manufactures small parts and uses an activity-based costing system.

Activity ​	Est. Indirect Activity Costs	Allocation base ​	Cost allocation rate ​
Materials	$78,000	Material moves	$4.00/move
Assembling	$259,000	Direct labor hours	$11.00/dir. labor hour
Packaging	$100,000	# of finished units	$3.00/finished unit

The following parts were produced in October with the following information:

Part	# Produced	Materials Costs	# Moves	Dir. Labor Hrs.
A	2450	$3400	1000	150
B	2000	$8500	1700	225
C	4750	$10,000	2400	1800

Total unit cost for part B is closest to (rounded to two decimal places)

		$11.89
		$7.64
		$7.65
		$6.69

Answer 1

Activity	Activity rate	Activity used	Cost allocated
Material	$4/move	1,700	1,700 x 4 = 6,800
Assembling	$11/direct labor hour	225	11 x 225 = 2,475
Packaging	$3/Finished unit	2,000	3 x 2,000 = 6,000
Total cost			$15,275

Total cost of B = Total cost + Material costs

= 15,275 + 8,500

= $23,775

Total unit cost for part B = Total cost/Number of units produced

= 23,775/2,000

=$11.89 per unit

First option is the correct option

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