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Activity Based Costing - Cost per driver

1. Larry Corporation has developed ideal standards for four activities: labor, materials, inspection, and receiving. Information is as follows:
Activity Activity Driver SQ AQ SP
Inspection Inspection hours -0- 40,000 $ 12
Labor Hours 50,000 56,000 18
Materials Pounds 100,000 105,000 15
Receiving Orders 150 190 450

The actual prices paid per unit of each activity driver were equal to the standard prices.
The actual costs for receiving are a)$85,500 b)$67,500 c)$49,500 d)$18,000.

2. Friedrich Company has developed ideal standards for four activities: labor, materials, inspection, and receiving.

Information is as follows:
Activity Activity Driver SQ AQ SP
Inspection Inspection hours -0- 40,000 $ 4
Labor Hours 50,000 56,000 6
Materials Pounds 100,000 105,000 5
Receiving Orders 150 190 150

The actual prices paid per unit of each activity driver were equal to the standard prices. The non-value-added costs for labor are a)$300,000 b)$36,000 c)$28,000 d)$25,000.

Solution Summary

The solution calculates cost per driver in an activity based costing example of Larry Corporation & Friedrich Company

$2.19