Question

Pelder Products company manufactures two types of engineering diagnostic equipment used in The construction. in two products are based on different technologies, and ultrasound, but are the manufacturing cost x-ray ultrasound products by adding together direct materials, direct labor, a overhead cost applied based on the number of direct labor hours. The factory has three overhead departments that support the single production line that makes both products. Budgeted overhead spending for the departments is as follows: Department Engineering Material design handling Setup Tota $5,000 $3,000 $14.000 $6,000 Pelder's budgeted manufacturing activities and costs for the period are as follows:
Product
Activity X-Ray Ultrasound
Units produced and sold 50 100
Direct materials used $5,000 $8,000
Direct labor hours used 100 300
Direct labor cost 4000 12000
Number of parts used 400 600
Number of engineering changes 2 1
Number of product setups 8 7
The budgeted cost to manufacture one ultrasound machine using the activity-based costing method is:_______.
a. $ 225
b. $ 264
c. $ 293
d. $ 305

Answer 1

Answer:

b. $ 264

Explanation:

Engineering    

design                    mat. handling       Setup                 Total

$6,000                   $5,000                 $3,000               $14.000

2 for X-rays            400                       8 for X-rays    

1 for ultrasound      600                       7 for ultrasound

costs fro producing 100 ultrasound machines:

• direct materials $8,000
• direct labor $12,000
• design costs = ($6,000/3) x 1 = $2,000
• setup costs = ($3,000/15) x 7 = $1,400
• material handling costs = ($5,000/1,000 parts) x 600 = $3,000

total production costs = $26,400

production costs per unit = $26,400 / 100 units = $264