Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? (Round off your answer to the nearest whole dollar.)
A) $6,086
B) $9,129
C) $11,618
D) $3,961

Question

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? (Round off your answer to the nearest whole dollar.)
A) $6,086 
B) $9,129 
C) $11,618 
D) $3,961

Quizplus · Accepted Answer

Materials handling cost allocated to wall mirrors = (Direct labor-hours for wall mirrors / Total direct labor-hours) * Total materials handling cost= (1,217 / 2,914) * $29,129= $11,618

Accola Company Uses Activity-Based Costing