irm XYZ has a Seat Manufacturing Department that uses ABC. XYZs activity cost allocation rates...
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Accounting
- irm XYZ has a Seat Manufacturing Department that uses ABC. XYZs activity cost allocation rates include the following:
| Activity | Allocation Base | Activity Cost Allocation Rate |
| Machining | Number of machine hours | $30 per machine hour |
| Assembling | Number of parts | $0.50 per part |
| Packaging | Number of finished seats | $0.90 per finished part |
Suppose a car manufacturing firm ABC asked for a bid on 50,000 build-in baby seats that would be installed as an option on some SUVs. Each seat has 20 parts and the direct materials cost per seat is $11. The job would require 10,000 direct labor hours at a labor wage rate of $25 per hour. In addition, firm XYZ will use a total of 400 machine hours to fabricate some of the parts required for the seats.
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