Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:
During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit.
-What is the total manufacturing cost for machine setups?
A) $150
B) $500
C) $250
D) $300

Question

Kratz Manufacturing Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:
  During the month, 100 units were produced, with no defects, requiring three setups. Each unit consisted of 17 parts, 3 direct labor hours and 2.5 machine hours. Direct materials cost $50 per finished unit.
-What is the total manufacturing cost for machine setups?
A) $150 
B) $500 
C) $250 
D) $300

Quizplus · Accepted Answer

(3 x $50) = $150

Kratz Manufacturing Company Uses an Activity-Based Costing System