Determine the cost allocation rate for each activity

1 Columbus Co has determined the following activity cost pools and cost driver levels for the year:

Activity Cost Pool Activity Cost Activity Cost Driver

machine setup $500,000 11,500 setup hours

material handling $130,000 2,500 tons of material

machine operation $475,000 11,000 machine hours

The following data is for the production of one batch of product X:

units produced 400

machine hours 5

direct labor hours 180

direct labor costs $6,000

direct materials cost $50,000

tons of material 14

setup hours 6

Required:

Part A: Determine the cost allocation rate for each activity (round to two decimals)

Part B: Using the cost allocation rate calculated in Part A allocate indirect manufacturing costs to each activity

Part C: Calculate the total product cost for a single batch of product X

Part D: Calculate the total product cost per unit of each product X

Solution:

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