Answer (B) is correct . An activity-based costing (ABC) system allocates overhead costs on the basis of some causal relationship between the incurrence of cost and activities. Because the moves for wall mirrors constitute 25% (5 / 20) of total moves, the mirrors should absorb 25% of the total materials handling costs. Thus, $12,500 ($50,000 * 25%) is allocated to mirrors. The remaining $37,500 is allocated to specialty windows. Dividing the $12,500 by 25 units produces a cost of $500 per unit of mirrors.
Answer (A) is incorrect because The amount of $1,000 uses direct labor as the allocation basis.
Answer (C) is incorrect because The amount of $1,500 is the allocation per unit of specialty windows.
Answer (D) is incorrect because The amount of $2,500 is not based on the number of material moves.
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Under activity-based costing (ABC), Zeta’s materials handling costs allocated to one unit of wall mirrors would be
