Question

Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, Its budgeted cost and related cost driver is identified below. 

 The following information pertains to the three product lines for next year: 

What is Barnett's pool rate for the material-insertion activity?

Answer 1

WORKING NOTES:
	CALCULATION OF NUMBER OF UNITS TO BE INSERTED
		Economy	Standard	Deluxe	Total
	Units to be produced (A)	11700	6700	3700	22100
	Number of Parts Per unit(B)	27	32	42
	Number of parts introduce (AXB)	315900	214400	155400	685700
SOLUTION :
	Calculation of the Cost Driver Rate of Material - insertion activity
	Cost Driver Rate = Activity Cost / Cost Driver
			Activity Cost / Cost Driver =
	Activity	Cost Driver	Activity Cost	"/"	Cost Driver	" = " To	Cost Driver Rate
	Material insetion activity	No. of parts inserted	$                   24,92,000	"/"	$               6,85,700	" = " To	$                      3.63
ANSWER = OPTION 1 = $ 3.63 PER PART