Reference no: EM132572226
Miramar Industries manufactures two products, A and B. The manufacturing operating involves three overhead activities - production setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
Activity Cost Activity Base
Production Setup $250,000 Number of setups
Material Handling $150,000 Number of parts
General Overhead $80,000 Number of direct labor hours
Each product's total activity in each of the three areas are as follows:
Product A Product B
Number of setups 100 300
Number of parts 40,000 20,000
Number of direct labor hours 8,000 12,000
Question 1: What is the activity rate for Production Setup?
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