Question

Kilwin Candy Company employs 6 workers, each working 8-hour days. Each worker has the capacity to make 200 candy bars per day. The average pay of these workers is $8.00 per hour. On Wednesday, the workers only made 1,080 candy bars. The cost driver rate for this activity was calculated to be $0.32 per bar. The cost of unused capacity on Wednesday was:

$40.20

$38.40

$37.90

$36.50

None of these.

Answer 1

Ans:

Calculation of cost of unused capacity:

Cost of Unused capacity = Unused capacity * Cost driver

Unused capacity :

No. of workers : 6

Capacity per worker : 200 Candy

Total capacity per Day : 1,200 Candy

Actual Output : 1,080 Candy

Unused Capacity = 1,200 - 1080 = 120 Candies

Cost driver : $0.32

Cost of Unused capacity = 120 * $0.32 = $38.40

So correct answer is Option B.

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