ABC, Inc. has decided to try Activity Based Costing. They currently have a brewing department with a monthly budget of $81,000 and a bottling department with a monthly budget of $26,000. The company has determined the following activities and total monthly indirect costs associated with each: Setup, $15,000; Brewing, $58,000; Bottling, $4,000; Quality Control, $20,000; and Cleanup, $10,000. Every month they produce 6,000 bottles of High Beer and 34,000 bottles of Low Beer in batches of 2,000 each. Allocate setup, bottling, and cleanup based on batches. Allocate all Quality Control to High Beer because Low Beer is not tested. Allocate brewing based on time assuming it is 20 hours to brew a batch of High Beer but only 5 to brew Low Beer. What is the allocation rate for brewing using ABC?

Box 1: Select the best answer