Question

A company that provides packing services has an activity-based costing system with three activity cost pools scheduling, packing boxes, and setting up machinery. The activity rates are S5.96 per appointment scheduled, $1.06 per box packed, and $20 per machine set-up. If a customer requires 2 scheduled service call(s) and has 106 boxes to pack, using 5 different machines, how much cost would be assigned to the job for the customer by the activity-based costing system? Select one: a. $124.28 b. $27.02 c. $224.28 d. $212.36
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Answer #1

Option c - $224.28

Concept:

There are two steps under Activity based costing -

(1) Identifying activities in an organization and computing a predetermined rate for each activity

(2) Assigning the cost of each activity to all products and services as per actual consumption.

Calculation:

Rates for activity based costing Per Appointment Per Box Packed Per Machine Set-Up $20 $5.96 $1.06 Cost to be assigned to the Customer Particulars Appointment Box Packed Machine Set-Up Total QuantityRateAmount $5.96 $11.92 $1.06 $112.36 $20.00 $100.00 $224.28

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