Assignment
Megan Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The company's production activities, budgeted activity costs, and cost drivers for the coming year are as follows.
|
Activity
|
Activity overhead $
|
Cost driver
|
Cost driver quantity
|
|
Machine setup
|
$164,250
|
# of setups
|
730
|
|
Inspection
|
153,900
|
# of quality tests
|
450
|
|
Materials receiving
|
174,420
|
# of purchase orders
|
1,710
|
The budgeted data for smart phone case production are as follows.
|
Direct materials
|
$2.70 per unit
|
|
Direct labor
|
$0.57 per unit
|
|
Number of setups
|
95
|
|
Number of quality tests
|
400
|
|
Number of purchase orders
|
55
|
|
Production
|
20,750 unit
|
Calculate the activity-based unit cost of the smart phone case.