Stanley Company Has Identified the Following Activities Related to Indirect

Short Answer

Stanley Company has identified the following activities related to indirect production costs:
$\begin{array}{lll}\text { Activity }&\text { Activity Costs }&\text { Cost Divers }\\\text { Machine Setup } & \$ 180,000 & 1,500 \text { setup hours } \\\text { Materials Handling } & \$ 50,000 & 12,500 \text { pounds of materials } \\\text { Electric Power } & \$ 20,000 & 20,000 \text { kilowatt hous }\end{array}$
Stanley Company has obtained the following data concerning two products:
$$\begin{array} { l l l } & \text { Product 1 } & \text { Product 2 } \\\text { Number of units produced } & 4,000 & 20,000 \\\text { Direct materials cost } & \$ 20,000 & \$ 25,000 \\\text { Direct labor cost } & \$ 12,000 & \$ 20,000 \\\text { Number of setup hours } & 100 & 120 \\\text { Pounds of materials used } & 500 & 1,500 \\\text { Kilowatt-hours } & 1,000 & 2,000\end{array}$$
Using an activity-based costing system,what amount of materials handling cost is assigned to Products 1 and 2?
$$\begin{array} { l l } &\text { Product 1 } & \text { Product } 2 \\A)&\$ 2,000 & \$ 6,000 \\B)&\$ 8,333 & \$ 41,667 \\C)&\$ 12,500 & \$ 37,500 \\D)&\$ 20,000 & \$ 30,000\end{array}$$