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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%

    © BrainMass Inc. brainmass.com June 4, 2020, 12:12 am ad1c9bdddf
    https://brainmass.com/business/accounting/computing-abc-method-and-to-compute-a-cost-drive-325621

    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

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