Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information:
Total manufacturing costs for Part 001 is
A)$3775
B)$1900
C)$5275
D)$3400

Question

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division.  The following units were produced in December with the following information:
 Total manufacturing costs for Part 001 is
A)$3775 
B)$1900 
C)$5275 
D)$3400

Quizplus · Accepted Answer

Since the question asks for total manufacturing costs for Part 001, we need to use the activity-based costing system to assign costs to that specific part. Based on the information provided, we can calculate the cost per unit for each activity:

Activity 1: $100/150 units = $0.67 per unit
Activity 2: $2000/5000 units = $0.40 per unit
Activity 3: $750/750 units = $1 per unit
Activity 4: $2000/1000 units = $2 per unit

Then we can calculate the total cost per unit for Part 001:

Total cost per unit = ($0.67 x 150) + ($0.40 x 2000) + ($1 x 750) + ($2 x 1000) = $3775/4500 units = $0.84 per unit

Multiplying this by the number of units produced (1000) gives us the total manufacturing cost for Part 001:

Total manufacturing cost for Part 001 = $0.84 x 1000 = $840

Therefore, the best choice is C.

Beartowne Enterprises Uses an Activity-Based Costing System to Assign Costs