Question

CMA5-5

Chapter 5 Activity-Based Costing are given below Product AProductB CMAS-S. Atmel Inc. manufactures and sells two products. Data with regard to these products are given be 30,000 12,000 Units produced and sold Machine hours required per unit.. Receiving orders per product line . Production orders per product line......... Production runs 2 50 12 8 20 150 18 12 30 Total budgeted machine hours are 100,000. The budgeted overhead costs are shown below .. $ 450,00 Receiving costs Engineering costs. .。.. Machine setup costs.... 300,000 25,000 200,000 Using activity-based costing, the per unit overhead cost allocation of receiving costs for product Ais a. $3.75. b. $10.75 . $19.50 d $28.13.

Answer 1

Answer

• All working forms part of the answer
• Only answer for ‘receiving cost’ for Product A is asked.
• Amounts are in $
• Working for calculating solutions to the question.

A	Receiving costs	$450000
	Activity Drivers:
	(receiving orders per product line)
	Product A	50
	Product B	150
B	Total activity drivers	200
C=A/B	Activity Rates per cost driver	$2250
D	No of cost driver Product A	50
E=C x D	Total Receiving cost allocated	$112500
F	Total Units Product A	30000
G=E/F	Per unit Receiving cost	$3.75

• Hence, the correct answer is OPTION ‘a’ $3.75