Question

Ace, Inc. has three activity pools which have the following costs: Machine setups $15,000 Material moves $22,000 Machine operations $14,000 The activity cost drivers (and driver quantity) for the three pools are, respectively, number of setups (100), number of material moves (220), and number of machine hours (175). Product G10 used the following quantity of activity drivers to produce 100 units of final product: 12 setups, 20 material moves, and 32 machine hours. The total ABC cost and unit ABC cost assigned to Product G10 is: Select one: A. $3,630 total ABC cost and $36.30 unit ABC cost B. $10,300 total ABC cost and $103. unit ABC cost C. $6,360 total ABC cost and $63.60 unit ABC cost D. $3,300 total ABC cost and $330 unit ABC cost

Answer 1

Answer:-

Total ABC cost and unit
Particulars		Amount
		$
Machine setups	12 setups*$150 per setup	1800
Material moves	$20 per material move*$100 per move	2000
Machine opreations	32 machine hours*$80 per machine hour	2560
Total ABC cost (a)		6360
No. of units of final product (b)		100
Cost per unit (c=a/b)		63.6

Explanation:-

Calculation of Actvity rate
Activity based costing method
Cost to be allocated	Estimated cost (a)	Estimated cost driver (b)		Activity rate (c=a/b)
	$
Machine setup costs	15000	No. of setups	100	$150 per setup
Material moves	22000	No.of material moves	220	$100 per move
Machine opreations	14000	No. of machine hours	175	$80 per machine hour