Brown Corporation produces ignition equipment and programs for small equipment manufacturers. One of the most important parts of the company's new just-in-time production process is

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Brown Corporation produces ignition equipment and programs for small equipment manufacturers. One of the most important parts of the company's new just-in-time production process is quality control. Initially, a traditional cost accounting system was used to assign quality control costs to products. All of the costs of the Quality Control Department were included in the plant's overhead cost rate and allocated to products based on direct labor dollars. Recently, the firm implemented an activity-based costing system. The activities, cost drivers, and rates for the quality control function are summarized below, along with cost allocation information from the traditional system. Also shown is information related to one order of the Speedy line.

Traditional Costing Approach:

Quality control costs were assigned at a rate of 14% of direct labor dollars.

Order Speedy 7:

Charged with $15,000 of direct labor costs.

Activity-Based Approach for the Quality Control Function:

Required:
a. Compute the quality control cost that would be assigned to the Ace order under both the traditional approach and the activity-based costing approach to cost assignment.
b. What was the impact on the costs assigned to the Ace order as a result of shifting to the activity-based costingapproach?

Cost Order Speedy 7 Activity Usage Activities Cost Drivers Assignment Rates Incoming Materials Inspection In-ProcessNumber ofS0.95 per Inspection S15.75 per Type of material used type of10 types of material material 600 products products Number of processes per cell product Tool and Gauge S7 per 21 processes Control process Product Per order S65 per order 1 order Certification