Alpha Company Manufactures Breadboxes and Uses an Activity-Based Costing System

question 96

Multiple Choice

Alpha Company manufactures breadboxes and uses an activity-based costing system.The following information is provided for the month of May: Each breadbox consists of four parts,and the direct materials cost per breadbox is $7.00.There is no direct labor.What is the total manufacturing cost per breadbox?

• A)$17.40
• B)$24.00
• C)$12.40
• D)$26.00

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Definitions:

Activity-based Costing

An accounting method that allocates overhead costs to products based on the activities that consume resources.

Predetermined Activity Rates

Rates established prior to the period of use, determining the cost allocation for various activities in activity-based costing.

Estimated Activity Costs

Projected costs associated with specific activities or operations, often used in budgeting and planning processes.

Estimated Activity Volume

The projected amount of activity or production, measured in units, hours, or any other quantifiable terms, expected for a certain period.