What is broad averaging and what consequences can it have on costs?


2-Please determine the activity-cost-driver rate for packaging costs from the information given.


Projected sales in units 500,000

PER UNIT data:

Selling price $0.80

Direct materials $0.20

Direct labor $0.04

Hours per 1,000-unit batch:

Direct labor hours 2

Oven hours 1

Packaging hours 0.5

Total overhead costs and activity levels for the year are estimated as follows:

Activity Overhead Costs Activity levels

Direct Labor 2,400 hours

Oven $220,000 1,500 hours

Packaging $170,000 850 hours

Total Costs $390,000


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