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Fortunado, Inc., uses activity-based costing to account for its chrome bumper manu- facturing process. Company managers

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Fortunado, Inc., uses activity-based costing to account for its chrome bumper manu- facturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2012 and their allocation bases are as follows:

Materials handling $9,000 Number of parts
Machine setup 3,900 Number of setups
Insertion of parts 42,000 Number of parts
Finishing 82,000 Finishing direct labor hours
Total $136,900

Fortunado expects to produce 500 chrome bumpers during the year. The bumpers
are expected to use 4,000 parts, require 10 setups, and consume 1,000 hours of finishing
time.

Requirements

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each bumper.

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