Swanson Company Has Identified the Following Activities Related to Indirect

question 86

Short Answer

Swanson Company has identified the following activities related to indirect production costs:
$$\begin{array} { l l l } \text { Activity } & \text { Activity Costs } & \text { Cost Drivers } \\\text { Machine Setup } & \$ 180,000 & 1,500 \text { setup hours } \\\text { Materials Handling } & \$ 50,000 & 12,500 \text { pounds of materials } \\\text { Electric Power } & \$ 20,000 & 20,000 \text { kilowatt hours }\end{array}$$
Swanson Company has obtained the following data concerning two products:
$$\begin{array} { l l l } & \text { Product 1 } & \text { Product 2 } \\\text { Number of units produced } & 4,000 & 20,000 \\\text { Direct materials cost } & \$ 20,000 & \$ 25,000 \\\text { Direct labor cost } & \$ 12,000 & \$ 20,000 \\\text { Number of setup hours } & 100 & 120 \\\text { Pounds of materials used } & 500 & 1,500 \\\text { Kilowatt-hours } & 1,000 & 2,000\end{array}$$
Using activity-based costing,what amount of machine setup cost is assigned to Products 1 and 2?
$$\begin{array} { l l } &\text { Product 1 } & \text { Product } 2 \\A)&\$ 12,000 & \$ 14,400 \\B)&\$ 30,000 & \$ 150,000 \\C)&\$ 50,000 & \$ 130,000 \\D)&\$ 81,818 & \$ 98,182\end{array}$$

• A)&\$ 12,000 & \$ 14,400 \\
• B)&\$ 30,000 & \$ 150,000 \\
• C)&\$ 50,000 & \$ 130,000 \\
• D)&\$ 81,818 & \$ 98,182
• \end{array}\]

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