Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials handling, and general factory activities. Miramar uses...


Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials 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:


























ActivityCostActivity Base
Production setup$250,000Number of setups
Material handling150,000Number of parts
General overhead80,000Number of direct labor hours


Each product's total activity in each of the three areas are as follows:


























Product AProduct B
Number of setups100300
Number of parts40,00020,000
Number of direct labor hours8,00012,000


What is the activity rate for production setup?


a.$625 per setup

b.$2,500 per setup

c.$833 per setup

d.$400 per setup



Jun 10, 2022
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