Manchester united Inc manufactures sleeping bags using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June: Activity Estimated Indirect Activity Costs Allocation Base Estimated Quantity of Allocation Base Materials handling $1,800 Number of parts 5,000 parts Assembling $7,800 Number of parts 5,000 parts Packaging $3,000 Number of Sleeping bags 2,000 Sleeping bags Each sleeping bag consists of 6 parts; the total direct materials cost per sleeping bag is $8.00. If the cost to purchase the same sleeping bag from a supplier is $18.00, what should MU do to maximize profits?

Answer rating: 100% (QA)

answer 1 Calculate the Activity Cost per Unit Divide the estimated indirect activity costs by their respective allocation base quantities Materials ha... View the full answer