Activity-based costing system, Managerial Accounting

The Pinewood Furniture Company Pty Ltd plans to design two lines of chairs in the coming year-lounge and patio. The company is considering introducing an activity-based costing system. Given below are every activity, its cost and its related activity driver.

Activity                       Cost                       Activity Driver
Material Setups         $300,000               Number of setups
Material handling       $250,000             Number of parts
Cutting                     $700,000             Number of parts
Assembly                 $600,000               Direct labour hours
Finishing                  $450,000                 Number of units

The level of activity for the year is:

                                             Lounge    Patio
Units to be produced               10,000    5,000
Number of Setups                     60         60
Number of parts per unit            10         5
Direct Labour Hours per unit        5          2


Under an activity-based costing system, what is the total cost of patio chairs for the annual?

Posted Date: 3/21/2013 2:20:43 AM | Location : United States

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