ent x 17-Prt Level Submission) Health \"R Us, Inc., uses a traditional product c

Question

ent x 17-Prt Level Submission) Health "R Us, Inc., uses a traditional product costing system to assign overhead costs uniformly to all its packaged multigrain products. To meet Food and Drug Administration requirements and to assure its 17% of direct labor costs. Its direct labor cost for the month of June for its low-calorie breakfast iness 71,500 t agrees to adopt activity-based costing. Data relating to the low-calorie breakfast line for the month of June are as follows Number of Cost Drivers In-process inspections FDA Number of pounds $0.90 per pound Number of servings $0.33 per serving11,000 servings Customer orde $12.00 per order 500 orders calorie breaikfast product line for the month of June(3) using the traditional product costing system (direct labor cost is the cost driver), and (2) using activity-based costing. Attempts: 0 of 3 usedAVE FOR LATe

Explanation / Answer

Quality Control Overhead Cost Under Traditional Costing

=17% of Direct labour

= 17% of $ 71,500

=$12,155

Quality Control Overhead Cost Under activity based costing

Total                                                                 $14,670

Inspection of material received       =5600*0.9   =   $5040 In Process Inspection                   =11000*0.33 = $3630 FDA Certification                         =12*500        = $6000

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