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Underwood Company is preparing its annual profit plan. As part of its analysis of the profitability of individual products, the controller estimates the amount of manufacturing overhead that should be assigned to each of the two product lines from the information given below. Wall Mirrors Specialty Windows Total units produced 30 30 Total number of material moves 7 18 Direct labor hours per unit 145 145 Budgeted material-handling costs are $30,000. The material-handling cost per wall mirror under activity-based costing is:

Sagot :

The material-handling cost per wall mirror under activity-based costing is $280

What is activity-based costing?

Activity-based costing involves absorbing overheads based on cost drivers which directly impact the incurrence of the overhead, in this case, material moves determine the amount of material-handling costs to be incurred, hence, material-handing overheads would be absorbed into the two products based on material moves, which is the appropriate cost driver.

There 25 materials move in both divisions (i.e. 7+18=25)

Material-handling cost per material move=Budgeted material-handling costs /total material moves

Budgeted material-handling costs =$30,000

Material-handling cost per material move=$30,000/25

Material-handling cost per material move=$1,200

Total material-handing costs for wall mirror=number of material moves for wall mirror*Material-handling cost per material move

Total material-handing costs for wall mirror=7*$120

Total material-handing costs for wall mirror=$8,400

material-handling cost per wall mirror=Total material-handing costs for wall mirror/number of wall mirrors

material-handling cost per wall mirror=$8,400/30

material-handling cost per wall mirror=$280

Find out more about   on activity-based costing:https://brainly.com/question/14912137

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