Question

Basic Company uses activity-based costing. Assume the predetermined overhead allocation rates are $0.90 per machine hour for mixing department and $2.20 per test for sampling department. Assume that each unit requires 3 machine hours and 2 tests. What is the mixing and sampling cost assigned to one unit?

Answer 1

Answer:

$2.70 mixing; $4.40 sampling

Explanation:

Mixing:

Cost assigned to one unit = Rate machine hour for mixing * requires machine hours for each unit

Cost assigned to one unit = ($0.90 * 3 machine hours)

Cost assigned to one unit = $2.70

Sampling:

Cost assigned to one unit = Rate test for sampling department * tests requires per unit

Cost assigned to one unit = ($2.20 * 2 tests)

Cost assigned to one unit = $4.40