Carpenter Corporation manufactures two products, Product A and Product B. The co
ID: 2540018 • Letter: C
Question
Carpenter Corporation manufactures two products, Product A and Product B.
The company uses an Activity Based Costing System that assigns costs based on activity cost drivers.
The following data is available:
Product A
Product B
Total
Direct Materials Cost (per unit)
$70
$140
Direct Labor Costs (per hour)
$20
$30
Supporting Labor Costs
$16,000
Utilities and Repairs Costs
$96,000
Order Processing Costs
$24,560
Direct Labor (Production) Hours (per unit)
2
3
Production Units
2,400
800
Supporting Labor (hours)
600
200
Customer Orders
48
32
Compute the Total Manufacturing Costs for Product A using the Activity Based Costing System.
Product A
Product B
Total
Direct Materials Cost (per unit)
$70
$140
Direct Labor Costs (per hour)
$20
$30
Supporting Labor Costs
$16,000
Utilities and Repairs Costs
$96,000
Order Processing Costs
$24,560
Direct Labor (Production) Hours (per unit)
2
3
Production Units
2,400
800
Supporting Labor (hours)
600
200
Customer Orders
48
32
Explanation / Answer
The correct answer is $ 354,736
Note:
2.
3.
4.
5. Total Diret Labor Hours =
Product A = 2,400 Units * 2 Per Unit
= 4,800
Product B = 800 Units * 3 Per Unit
= 2,400
Total = 4,800 +2,400
= 7,200 Hours
Overhead Costs Cost Drivers Activity Total ( A+ B) Activity Rate ( Cost / Activity Total) Supporting Labor Costs 16,000 Supporting Labor (hours) 800 20 Utilities and Repairs Costs 96,000 Total Direct Labor Hours 7200 13.33333333 Order Processing Costs 24,560 Customer Orders 80 307