The Pinewood Furniture Company Pty Ltd plans to design two lines of chairs in the coming year-lounge and patio. The company is considering introducing an activity-based costing system. Given below are every activity, its cost and its related activity driver.
Activity Cost Activity Driver
Material Setups $300,000 Number of setups
Material handling $250,000 Number of parts
Cutting $700,000 Number of parts
Assembly $600,000 Direct labour hours
Finishing $450,000 Number of units
The level of activity for the year is:
Lounge Patio
Units to be produced 10,000 5,000
Number of Setups 60 60
Number of parts per unit 10 5
Direct Labour Hours per unit 5 2
Needed:
Under an activity-based costing system, what is the total cost of patio chairs for the annual?