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Compute the cost allocation rate for each activity

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Fortune, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2018 and their allocation bases are as follows:

Activity Budget Cost Allocation Base

Materials handling 6,000 Number of parts

Machine setup 3,300 Number of setups

Insertion of parts 40,000 Number of parts

Finishing 82,000 Finishing direct labor hours

  • Fortune expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 2,000 parts, require 15 setups, and consume 1,000 hours of finishing time

Question 1: Compute the cost allocation rate for each activity.

Reference no: EM132500952

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