Exercise 8-4 (10 minutes)
K425
Activity Cost Pool Activity Rate Activity ABC Cost
Labor related ... $6 per direct labor-hour 80 direct labor-hours $ 480
Machine related ... $4 per machine-hour 100 machine-hours 400
Machine setups ... $50 per setup 1 setups 50
Production orders... $90 per order 1 order 90
Shipments ... $14 per shipment 1 shipment 14
Product sustaining... $840 per product 1 product 840
Total ... $1,874
M67 Activity Cost Pool Activity Rate Activity ABC Cost
Labor related ... $6 per direct labor-hour 500 direct labor-hours $ 3,000
Machine related ... $4 per machine-hour 1,500 machine-hours 6,000
Machine setups ... $50 per setup 4 setups 200
Production orders... $90 per order 4 orders 360
Shipments ... $14 per shipment 10 shipments 140
Product sustaining... $840 per product 1 product 840
Total ... $10,540
K425 M67
Total cost (a) ... $1,874 $10,540
Number of units produced (b) ... 200 2,000
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