Refer to the information presented in M4-5. Suppose that Newkirk manufacturers only the two products mentioned and
Question:
Refer to the information presented in M4-5. Suppose that Newkirk manufacturers only the two products mentioned and they consume 100 percent of the company’s quality inspections. Using activity proportions, determine how much quality control cost will be assigned to each of Newkirk’s product lines.
Data from M4-5
Newkirk Co. has identified one of its cost pools to be quality control and has assigned \($50,000\) to that pool. Number of inspections has been chosen as the cost driver for this pool; Newkirk performs 25,000 inspections annually. Suppose Newkirk manufactures two products that consume 10,000 and 15,000 inspections each. Using activity rates, determine the amount of quality control cost to be assigned to each of Newkirk’s product lines.
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