Watson's Computer Company uses ABC to account for its manufacturing process. Watson's Computer Company expects to produce 2620 computers. Watson's Computer Company also expects to use 15,000 parts and have 20 setups.
The allocation rate for packaging is (Round all answers to two decimal places.)
A)$3.47
B)$10.69
C)$5.65
D)$5.93

Question

Watson's Computer Company uses ABC to account for its manufacturing process.  Watson's Computer Company expects to produce 2620 computers. Watson's Computer Company also expects to use 15,000 parts and have 20 setups.
The allocation rate for packaging is (Round all answers to two decimal places.)
A)$3.47 
B)$10.69 
C)$5.65 
D)$5.93

Quizplus · Accepted Answer

ABC (Activity-Based Costing) allocates costs based on activities, and the allocation rate for each activity is calculated by dividing the total cost of the activity by the total amount of the cost driver used for that activity.

Total cost for packaging = $84,750 
Total parts used = 15,000 
Allocation rate for packaging = $84,750 ÷ 15,000 = $5.65

Therefore, the answer is choice C.

Watson's Computer Company Uses ABC to Account for Its Manufacturing