Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below.
-Shubelik Company is changing to an activity-based costing method. It has determined that it will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities?
A)number of units to be produced
B)number of setups
C)number of inspections
D)number of direct labor hours

Question

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to five separate activity pools. The budgeted activity cost and activity base data by product are provided below.  ​
-Shubelik Company is changing to an activity-based costing method. It has determined that it will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities?
A)number of units to be produced 
B)number of setups 
C)number of inspections 
D)number of direct labor hours

Quizplus · Accepted Answer

The number of units to be produced is not a suitable activity base for setups, inspections, or assembly in activity-based costing, as these activities are more directly related to the number of setups, the number of inspections, and the amount of direct labor hours, respectively.

Panamint Systems Corporation Is Estimating Activity Costs Associated with Producing