Sparrow Manufacturing manufactures small parts and uses an activity-based costing system. $\begin{array}{|l|r|l|l|} \hline \text { Activity } & \begin{array}{l} \text { Est. Indirect Activity } \\ \text { Costs } \end{array} & \text { Allocation base } & \text { Cost allocation rate } \\ \hline \text { Materials } & \$ 70,000 & \text { Material moves } & \$ 2.00 / \text { move } \\ \hline \text { Assembling } & \$ 240,000 & \text { Direct labor hours } & \$ 8.00 / \text { dir. labor hour } \\ \hline \text { Packaging } & \$ 80,000 & \text { \# of finished units } & \$ 0.80 / \text { finished unit } \\ \hline \end{array}$ The following parts were produced in October with the following information: $\begin{array} { | l | r | r | r | r | } \hline \text { Part } & \text { \# Produced } & \text { Materials Costs } & \text { \# Moves } & \text { Dir. Labor Hrs. } \\ \hline \text { A } & 2,500 & \$ 2,500 & 800 & 200 \\ \hline \text { B } & 3,500 & \$ 7,000 & 1,500 & 300 \\ \hline \text { C } & 4,500 & \$ 11,250 & 2,200 & 1,000 \\ \hline \end{array}$ - Total packaging fees for all three parts is:

A) $ 3,600. B) $ 4,800. C) $ 8,400. D) $21,000. A) $ 3,600. B) $ 4,800. C) $ 8,400. D) $21,000.

Exam 4: Activity-Based Costing, lean Production, and the Costs of Quality

(Multiple Choice)

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