Problem
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 $186,480 # of setups 720 Inspection 151,800 # of quality tests 460 Materials receiving 217,350 # of purchase orders 1,890 The budgeted data for smart phone case production are as follows. Direct materials $2.60 per unit Direct labor $0.60 per unit Number of setups 90 Number of quality tests 427 Number of purchase orders 59 Production 20,160 units. Calculate the activity-based unit cost of the smart phone case.