Which of the following costs would be classified as variable and which would be classified as fixed, if units produced is the activity base?a. Direct materials costsb. Direct labor costsc. Electricity costs of $0.35 per kilowatt-hour
Which of the following costs would be classified as variable and which would be classified as fixed, if units produced is the activity base?a. Direct materials costsb. Direct labor costsc. Electricity costs of $0.35 per kilowatt-hour
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Handle Company has identified the following activities relatedto indirect production costs:
ACTIVITY | ACTIVITY COSTS | COST DRIVERS |
Machine Setup | $150,000 | 1,500 setup hours |
Materials Handling | $60,000 | 13,500 pounds of materials |
Electric Power | $30,000 | 15,000 kilowatt hours |
Handle Company has obtained the following data concerning twoproducts:
PRODUCT 1 | PRODUCT 2 | |
Number of units produced | 6,000 | 24,000 |
Direct materials cost | $19,000 | $24,000 |
Direct labor cost | $11,000 | $22,000 |
Number of setup hours | 90 | 60 |
Pounds of materials used | 600 | 1,200 |
Kilowatt-hours | 1,000 | 1,500 |
Using activity-based costing, what amount of machine setup costis assigned to Products 1 and 2? Answer will be shown as Product1:Product 2
| A. | $90,000:$60,000 | |
| B. | $9,000:$6,000 | |
| C. | $60,000:$90,000 | |
| D. | $30,000:$120,000 |
