Cost of Product under traditional and activity based overhead recovery from facts.
Taylor Jones owns a jewelry store. Job 555 involves the creation of a bracelet for one of his customers. Direct materials for the bracelet amounted to $400, and the direct labor was $200. It took four machine hours to complete the bracelet. Plantwide overhead rates are calculated at 125 percent of direct labor cost. Taylor asked his accountant to look into an activity-based costing system. Two activities were identified: machining and materials handling. The following information was gathered:
1. Using the plantwide rate, how much would the bracelet cost?
a. $760
b. $725
c. $600
d. $850
2. Using activity-based costing, how much would the bracelet cost?
a. $760
b. $725
c. $600
d. $850