Reference no: EM132514869

Twista Manufacturing has the following activities and activity costs per year:

Machining ($20 000);

Forklifting ($10 000);

machine setup ($32 000), and

quality inspection ($40 000).

• The operation starts with setting up the machines; each batch of products requires a different setup. This is followed by machining, where the cost of machining varies directly with the number of machine hours. Forklifts are used to move the work in progress around. Because quality is important, an inspection is carried out for each batch of products.

The following information is also available:

Number of machine hours per year: 20 000

machine hours Number of forklift moves per year: 500 moves

Number of batches per year: 4000 batches

• Each year, Twista Manufacturing produces 5000 units of Product X. These units of Product X require 5000 machine hours, 120 moves and 500 batches to produce. The direct materials and direct labour together cost $15 per unit of Product X.

Question 1: The forklifting costs and machine set up costs allocated to Product X are:

Option A. $2400 and $4000.

Option B. $5000 and $9000.

Option C. $2400 and $5000.

Option D. $5000 and $4000.