Question

Merone Company allocates materials handling cost to the company's two products using the below data:

	Modular Homes	Prefab Barns
Total expected units produced	6,900	9,900
Total expected material moves	690	290
Expected direct labor-hours per unit	890	390

The total materials handling cost for the year is expected to be $300,060.

If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the modular homes is closest to:

Answer 1

Total material handling cost = $300,060

Expected material moves in modular homes = 690

Expected material moves in prefab barns = 290

Total Expected material moves = Expected material moves in modular homes +Expected material moves in prefab barns

= 690+290

= 980

Activity rate for material handling cost = Total material handling cost / Total Expected material moves

= 300,060/980

= $306.183673 per material move

Material handling cost allocated to madular homes = Expected material moves in modular homes x Activity rate for material handling cost

= 690 x 306.183673

= $211,267

the total materials handling cost allocated to the modular homes is closest to = $211,267

Kindly comment if you need further assistance.

Thanks‼!