Frederick, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have...

 

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Frederick, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2009 and their allo- cation bases are as follows: Activity Materials handling Machine setup Insertion of parts Finishing Total Total Budgeted Cost $ 9,000 3,400 48,000 80,000 $140,400 Allocation Base Number of parts Number of setups Number of parts Finishing direct labor hours Frederick, Inc., expects to produce 1,000 chrome bumpers during the year. The bumpers are expected to use 3,000 parts, require 10 setups, and consume 2,000 hours of finishing time. Requirements 1. Compute the cost allocation rate for each activity. (p. 1209) 2. Compute the indirect manufacturing cost of each bumper. (p. 1209) Frederick, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2009 and their allo- cation bases are as follows: Activity Materials handling Machine setup Insertion of parts Finishing Total Total Budgeted Cost $ 9,000 3,400 48,000 80,000 $140,400 Allocation Base Number of parts Number of setups Number of parts Finishing direct labor hours Frederick, Inc., expects to produce 1,000 chrome bumpers during the year. The bumpers are expected to use 3,000 parts, require 10 setups, and consume 2,000 hours of finishing time. Requirements 1. Compute the cost allocation rate for each activity. (p. 1209) 2. Compute the indirect manufacturing cost of each bumper. (p. 1209)

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Answer Requirement 1 Indirect manufacturing cost Amount of allocation bas... View the full answer