irm XYZ has a Seat Manufacturing Department that uses ABC. XYZs activity cost allocation rates...
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Accounting
irm XYZ has a Seat Manufacturing Department that uses ABC. XYZs activity cost allocation rates include the following:
Activity
Allocation Base
Activity Cost Allocation Rate
Machining
Number of machine hours
$30 per machine hour
Assembling
Number of parts
$0.50 per part
Packaging
Number of finished seats
$0.90 per finished part
Suppose a car manufacturing firm ABC asked for a bid on 50,000 build-in baby seats that would be installed as an option on some SUVs. Each seat has 20 parts and the direct materials cost per seat is $11. The job would require 10,000 direct labor hours at a labor wage rate of $25 per hour. In addition, firm XYZ will use a total of 400 machine hours to fabricate some of the parts required for the seats.
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