Crump Manufacturing has provided the following information regarding its activity-based costing system:
Purchasing department costs are allocated based on purchase orders and the cost allocation rate is $52 per purchase order.
Assembly department costs are allocated based on the number of machine hours and the cost allocation rate is $27 per machine hour.
Inspection department costs are allocated based on the number of inspection hours and the allocation rate is $39 per inspection hour.
Each unit produced has a direct materials cost of $70 and a direct labor cost of $65. Crump has an
Order for 500 units which will require 40 purchase orders, 750 machine hours and 50 inspection hours. What is Crump's operating income from the order if the units are sold for $225 each?
A) $22,670
B) $20,720
C) $45,000
D) $88,220

Question

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The Answer of Crump Manufacturing has provided the following information regarding its activity-based costing system:
Purchasing department costs are allocated based on purchase orders and the cost allocation rate is $52 per purchase order.
Assembly department costs are allocated based on the number of machine hours and the cost allocation rate is $27 per machine hour.
Inspection department costs are allocated based on the number of inspection hours and the allocation rate is $39 per inspection hour.
Each unit produced has a direct materials cost of $70 and a direct labor cost of $65. Crump has an
Order for 500 units which will require 40 purchase orders, 750 machine hours and 50 inspection hours. What is Crump's operating income from the order if the units are sold for $225 each?
A) $22,670
B) $20,720
C) $45,000
D) $88,220

Crump Manufacturing Has Provided the Following Information Regarding Its Activity-Based