Page 7 - PowerPoint Presentation
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ACTIVITY BASED COSTING
Suggested Solution:
(b) Activity based costing
Total number of production runs:
Product A = (550 / 110) = 5 production runs
Product B = (110 / 55) = 2 production runs
Total machine setup hours:
Product A = 7 hours per production run x 5 production runs = 35 setup hours
Product B = 2 hours per production run x 17.5 production runs = 35 setup hours
Total machine set up hours = 35 + 35 = 70 setup hours
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