Question
BEARTPWN ENTERPRISE USES AN ACTIVITY BASED COSTINH SYSTEM TO ASSIGN COSTS IN ITS AUTO PARTS DIVISON

Activity Allocation base Cost allocation rate Materials Assembling Packaging Est. Indirect Activity Costs $61,000 $165,000 $8
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Answer #1
Activity Cost Allocation Activity Used Allocated Cost
Materials $3/move 300 300 x 3 = 900
Assembling $3/direct labor hour 500 500 x 3 = 1,500
Packaging $1.5/unit 1,450 1,450 x 1.5 = 2,175
Materials costs 2,500
Total Cost $7,075

Cost per unit of Part 001 = Total cost/Number of units

= 7,075/1,450

= $4.88

Correct option is A.

Kindly comment if you need further assistance. Thanks‼!

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