HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Material handling Cost Driver Number of parts Number of parts Machine hours Cost 225,000 2,475,000 Material insertion Automated machinery Finishing 840,000 170,000 Direct labor hours Orders shipped Packaging 170,00 Total $3,880,00 The following information pertains to the three product lines for next year: Economy Standar d 5,000 500 15 Deluxe Units to be produced Orders to be shipped Number of parts per unit 10,000 1,000 10 2,000 200 25 Machine hours per unit Labor hours per unit 1 2 3 2 5 5. What is HiTech's cost application rate for the material-handling activity? A. $1.00 per part. B. $2.25 per part. C. $6.62 per labor hour. D. $13.23 per part. E. A rate other than those listed above. 6. What is HiTech's cost application rate for the automated machinery activity? A. $24.00 per machine hour. B. $24.50 per labor hour. C. $49.42 per unit. D. $50.00 per machine hour. E. A rate other than those listed above. 7. What is HiTech's cost application rate for the finishing activity? A. $5.00 per labor hour. B. $5.00 per machine hour. C. $5.00 per unit. D. $7.50 per unit. E. A rate other than those listed above.
HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Material handling Cost Driver Number of parts Number of parts Machine hours Cost 225,000 2,475,000 Material insertion Automated machinery Finishing 840,000 170,000 Direct labor hours Orders shipped Packaging 170,00 Total $3,880,00 The following information pertains to the three product lines for next year: Economy Standar d 5,000 500 15 Deluxe Units to be produced Orders to be shipped Number of parts per unit 10,000 1,000 10 2,000 200 25 Machine hours per unit Labor hours per unit 1 2 3 2 5 5. What is HiTech's cost application rate for the material-handling activity? A. $1.00 per part. B. $2.25 per part. C. $6.62 per labor hour. D. $13.23 per part. E. A rate other than those listed above. 6. What is HiTech's cost application rate for the automated machinery activity? A. $24.00 per machine hour. B. $24.50 per labor hour. C. $49.42 per unit. D. $50.00 per machine hour. E. A rate other than those listed above. 7. What is HiTech's cost application rate for the finishing activity? A. $5.00 per labor hour. B. $5.00 per machine hour. C. $5.00 per unit. D. $7.50 per unit. E. A rate other than those listed above.
Chapter1: Financial Statements And Business Decisions
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