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# Computing ABC method and to compute a cost drive

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Use the information below to answer the following question(s).
Apple Valley Corporation uses a job order cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are:
Department A Department B
Direct materials \$700,000 \$100,000
Direct labor \$200,000 \$800,000
Manufacturing support \$600,000 \$400,000

The actual material and labor costs charged to Job #432 are as follows:
Job #432
Direct materials: \$25,000
Direct labor:
Department A \$ 8,000
Department B \$12,000
\$20,000

Apple Valley applies manufacturing support costs to jobs on the basis of direct labor cost using departmental rates determined at the beginning of the year.

For Department A, the support cost driver rate is:
A. 66%
B. 33%
C. 300%

#### Solution Preview

Apple Valley applies manufacturing support costs to jobs on the basis of direct labor cost using departmental rates determined at the beginning of the year.

For Department A, the support cost driver ...

#### Solution Summary

Response discusses the ABC method and to compute a cost drive

\$2.19