8 Quantum Corporation has provided the following data from its activity-based co

Question

8 Quantum Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Assembly Processing orders Inspections Total Activity Overhead Cost $1,054,312 $ 35, 448 s 100, 640 56, 200 machine hours 1,400 orders 1,480 inspection hours 2 points The company makes 260 units of product J71B a year, requiring a total of 900 machine-hours, 28 orders, and 14 inspection-hours per year. The product's direct materials cost is $26.70 per unit and its direct labor cost is $17.30 per unit. According to the activity-based costing system, the total cost for producing the 260 units of the J71B product is:

Explanation / Answer

Overhead cost/machine hour=(1054312/56200)=$18.76/machine hour

Cost/order=(35448/1400)=$25.32/order

Cost/inspection hour=(100640/1480)=$68/inspection hour.

Total overhead=(18.76*900)+(25.32*28)+(68*14)

=$18544.96

Hence total cost=Direct material+Direct labor+Total overhead

=(260*26.7)+(260*17.3)+18544.96

=$29984.96

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