# Swimm Company allocates materials handling cost to the company's two products using the below...

## Question:

Swimm Company allocates materials handling cost to the company's two products using the below data:

Modular Homes | Prefab Barns | |
---|---|---|

Total expected unit's produced | 3,000 | 4,000 |

Total expected material moves | 400 | 100 |

Expected direct labor-hours per unit | 700 | 200 |

The total materials handling cost for the year is expected to be $72,065.

1. If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the prefab barns

A) $16,014

B) $19,880

C) $36,890

D) $36,033

2. If the materials handling cost is allocated on the basis of material moves, how much of the total materials handling cost would be allocated to the modular homes?

A) $36,033

B) $57,652

C) $56,051

D) $35,175

## Activity-Based Costing (ABC) Process:

The activity-based costing (ABC) method is a process used for allocating indirect costs to different product lines and divisions by identifying a pool of all the possible cost drivers and determining their respective activity rates. The activity rates are thereafter multiplied with the respective resource consumption.

## Answer and Explanation: 1

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View this answer**Answer to 1**

The total value of the direct labor hours is given by:

- = (Units of Modular Homes * direct labor hours per unit) + (units of Prefab Barns...

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Chapter 7 / Lesson 21Activity cost pools are groups of costs that are influenced by a common cost driver, determining how much each cost occurs. Identify various activity cost pools through several examples, noting the common cost driver for each.

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