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What activity cost per unit of activity driver for material

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Reference no: EM132552824

The Pinewood Furniture Company Pty Ltd plans to manufacture two lines of chairs in the coming year - lounge and patio. The company is considering introducing an activity-based costing system. Given below are each 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

Question 1: Under an activity-based costing system, what is the activity cost per unit of activity driver for material handling?

Select one:

a. $2.00 per part

b. $16.67 per part

c. $2.50 per part

d. $ 5.00 per part

e. $ 4.17 per direct labour hour

Reference no: EM132552824

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