6 -

Brahtz Company uses an activity-based costing system. It has the following manufacturing activity areas, related cost drivers and cost allocation rates:

Activity	Cost Driver	Cost Allocation Rate
Machine setup	Number of setups	$25.00
Materials handling	Number of parts	0.25
Machining	Machine hours	13.00
Assembly	Direct labor hours	22.00
Inspection	Number of finished units	7.00

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 per unit manufacturing cost for the period?

$ 6.75

$160.50

$136.75

$161.25

7 - Betsys Brew is a successful brewery engaged in the development and production of specialty micro brews. It uses manufacturing cost hierarchy to allocate costs to various activities. During the past year, it has incurred $1,450,000 of product development costs, $950,000 of materials handling costs, $2,500,000 of production line labor costs, $900,000 for production setup costs, $500,000 in power costs for cooling beer and running equipment and $1,750,000 for manufacturing facility management. Using the manufacturing cost hierarchy, what is the total cost that would be classified as unit-level activity costs?

$ 850,000

$2,500,000

$3,950,000

$3,850,000

12 -Number of machine hours is most appropriate as a cost driver for which of the following types of activity costs?

	Machining
	Purchasing
	Assembly
	Payroll