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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Miramar Industries manufactures two products, A and B. The manufacturing operating involves three overhead activities - production setup, material handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities:
| Activity | Cost | Activity Base |
| Production Setup | $250,000 | Number of setups |
| Material Handling | $150,000 | Number of parts |
| General Overhead | $80,000 | Number of direct labor hours |
| Â | Â | Â |
Each product's total activity in each of the three areas are as follows:
| Â | Product A | Product B |
| Number of setups | 100 | 300 |
| Number of parts | 40,000 | 20,000 |
| Number of direct labor hours | 8,000 | 12,000 |
| Â | Â | Â |
What is the activity rate for Production Setup?
a. $2,500 per setup b. $833 per setup c. $625 per setup d. $400 per setup
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