MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $29 per hour and that there were no beginning inventories. The following information was available for 2019, based on an expected production level of 533,333 units for the year: Budgeted Costs for 2019 $3,400,000 8,900,000 5,200,000 2,000,000 Cost Driver Used as Allocation Base Number of parts used Number of machine hours Direct labor hours worked Number of units tested Cost Allocation Rate $ 4.50 per part 14.50 per hour 5.50 per hour 3.75 per unit Activity Cost Driver Materials handling Milling and grinding Assembly and inspection Testing The following production, costs, and activities occurred during the month of August: Units Produced/Tested 54,000 Direct Materials Costs $3,000,000 Number of Parts Used 275,000 Machine Hours 99,000 Direct Labor Hours 170,000

MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $29 per hour and that there were no beginning inventories. The following information was available for 2019, based on an expected production level of 533,333 units for the year: Budgeted Costs for 2019 $3,400,000 8,900,000 5,200,000 2,000,000 Cost Driver Used as Allocation Base Number of parts used Number of machine hours Direct labor hours worked Number of units tested Cost Allocation Rate $ 4.50 per part 14.50 per hour 5.50 per hour 3.75 per unit Activity Cost Driver Materials handling Milling and grinding Assembly and inspection Testing The following production, costs, and activities occurred during the month of August: Units Produced/Tested 54,000 Direct Materials Costs $3,000,000 Number of Parts Used 275,000 Machine Hours 99,000 Direct Labor Hours 170,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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