Answer:
Company A
Using the activity-based costing approach, the percent of the company’s total Material Handling activity cost that would be allocated to Product B is:
d. 33%
Explanation:
a) Data and Calculations:
Product A Product B Product C Total Use
Number of units produced 1,000 units 7,000 units 2,000 units 10,000
Direct labor hours per unit 2 hours 2 hours 2 hours 6
Number of setups 30 setups 50 setups 20 setups 100
Number of material moves 600 moves 400 moves 200 moves 1,200
Number of products 1 product 1 product 1 product 3
Product B usage of Material Handling Activity Cost:
Allocation Basis = Number of material moves
Product B material moves = 400
Total material moves = 1,200
Therefore, the percentage of Product B usage of material handling activity is:
= 400/1,200 * 100
= 33%
