Jackson Enterprises manufactures two products - a basic gizmo and an advanced mo
ID: 2402111 • Letter: J
Question
Jackson Enterprises manufactures two products - a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three activities for allocation of indirect costs. Activity Cost Driver Cost-Allocation rate Materials receiving Number of parts $2.00 per part Production setup Number of setups $500.00 per setup Quality inspection Inspection time $90 per hour A production run for the basic model is 250 units, for the advanced model, 100 units. Each unit of product consumes the following activities: Number of parts Number of setups Inspection Time Basic Gizmo 10 1 10 minutes Advanced Gizmo 15 1 20 minutes Direct costs for the two products are as follows: Direct Materials Direct Labor Basic Gizmo $50.00 $75.00 Advanced Gizmo $95.00 $125.00
A toatal cost of an advanced model would be?
Explanation / Answer
Calculate total cost of advanced model
Direct material 95 Direct labour 125 Material received (2*15) 30 Setup cost (500*1) 500 Quality inspection (90*20)/60 30 Total cost of advanced model 780Related Questions
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