Q1) Taylor Jones owns jewelry store. Job 555 involves creation of bracelet for one of his customers. Direct materials for bracelet amounted to $400, and direct labor was $200. It took four machine hours to complete bracelet. Plantwide overhead rates are computed at 125 percent of direct labor cost. Taylor asked his accountant to look into \activity-based costing system. Two activities were recognized: machining and materials handling.
1. Using plantwide rate, how much would bracelet cost?
i) $760
ii) $725
ii) $600
iv) $850
2. Using activity-based costing, how much would bracelet cost?
i) $760
ii) $725
iii) $600
iv) $850