Hello María,
Your rates are all correct, except for the Setting up rate.
The cost driver for this activity is the Set-up time in hours, and you know that each batch of product A requires 5h and each batch of product B requires 7h. In the beginning of the exercise, you had some information about the batches of each:
Your rates are all correct, except for the Setting up rate.
The cost driver for this activity is the Set-up time in hours, and you know that each batch of product A requires 5h and each batch of product B requires 7h. In the beginning of the exercise, you had some information about the batches of each:
- Product A was produced in batches of 1 000 units -> If production was 10 000 units, that means there were 10 batches
- Product B was produced in batches of 10 units -> If production was 500 units, that means there were 50 batches
10 * 5h + 50 * 7h = 400 hours. Therefore, your rate will be = 21 000 / 400 = 52,5€
Good study!
Good study!