Canada Corporation manufactures two sizes of calculators, regular and jumbo. The following information applies to their expectations
Question:
Canada Corporation manufactures two sizes of calculators, regular and jumbo. The following information applies to their expectations for the following period:
Cost Pool
Overhead Costs
Cost driver
Material handling
Machine maintenance
Setups
Inspections
$22,500
$150,000
$135,000
$69,875
45,000 Orders
7,500 Maintenance-hours
22,750 Setups
10,750 Inspections
Total overhead costs
$377,375
Production estimations:
Production Units:
Regular
Jumbo
Maintenance-hours
Direct labour-hours
8,000,000 units
16,000,000
200,000 maintenance hours
400,000 direct labour-hours
Expected direct costs amounts to $480,000 for the period. Support cost requirements of both products are substantially different from one another. Canada Corporation uses an ABC costing system.
The setups activity-cost driver rate is ________.
Select one:
a. $6.50 per setup
b. $5.24 per setup
c.
Not one of the options
d. $5.75 per setup
e.
$5.93 per setup
Fundamentals of Human Resource Management
ISBN: 978-0077718367
6th edition
Authors: Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright