Skyfire Manufacturing Has Two Departments, Assembly and Testing The Above Activities Are Used by the Two Departments as Given

Skyfire Manufacturing has two departments, Assembly and Testing. You are given the following information about the costs of 4 activities that occur at the manufacturing plant monthly: $\begin{array}{c}\begin{array}{lll}\underline{\text {Activity}}\\\text {Material handling}\\\text {Supervision on of direct labor}\\\text {Maintenance and cleaning}\\\text {Machining}\\\text {Total costs}\end{array}\begin{array}{c}\underline{\text { Total Costs }} \\\$ 100,000 \\105,000 \\150,000 \\\underline{240,000 }\\\underline{\underline{\$ 595,000}} \\\end{array}\begin{array}{c}\underline{\text { Volume of Cost Driver}}\\\text { 200,000 parts}\\\text { 70 employees}\\\text { 3,000 hours}\\\text { 6,000 machine hours}\\\\\end{array}\end{array}$
The above activities are used by the two departments as follows: $\begin{array}{lll}&\underline{\text {Assembly}}&\underline{\text {Testing}}\\\text { Material handling } & 150,000 \text { parts } & 50,000 \text { parts } \\\text { Supervision of direct labor } & 30 \text { employees } & 40 \text { employees } \\\text { Time spent cleaning } & 2,000 \text { hours } & 1,000 \text { hours } \\\text { Number of machine hours } & 4,000 \text { machine hours } & 2,000 \text { machine hours }\end{array}$
What is the ABC allocation rate for machining costs?

A) $80 per machine hour
B) $99 per machine hour
C) $0.025 per machine hour
D) $40 per machine hour

Correct Answer:

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