Indianapolis Auto Parts (IAP) has a Seat Assembly Department that uses activity-based costing

Subject:AccountingPrice:3.87 Bought7

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Indianapolis Auto Parts (IAP) has a Seat Assembly Department that uses activity-based costing. IAP system has the following estimated activities for the year:

Activity Cost

Allocation Base

Total

Purchasing $10,000

# of Purchase Orders

Assembling 610,000

# of Parts

Packaging 50,000

# of Finished Seats
 

IAP makes two models of seats with the following information:

Luxury Model                                                  Base Model

Number of Total Finished Seats

22,000          28,000

Number of Total Purchase Orders

120                 80

Number of Parts per seat

20                  35
Direct Materials Cost per seat

$10                $15

Direct Labor Cost per seat

$8                  $10

Suppose an automobile manufacturer has asked IAP for a bid on 25,000 Luxury Model seats. To fill this order IAP would need 100 purchase orders.

Calculate the activity rates for IAP.

Calculate the Average Cost Per Seat for the order.