After reading an article about activity-based costing in a trade journal for the furniture industry, Adria Lopez wondered if it was time to critically analyze overhead costs at Success Systems. In a recent month, Lopez found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows.

Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 6.15.

Required 1. What is the total cost of Job 6.15 if Success Systems applies overhead at 50% of direct labor cost?
2. What is the total cost of Job 6.15 if Success Systems uses activity-based costing?
3. Which approach to assigning overhead gives a better representation of the costs incurred to produce Job 6.15? Explain

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Activity Setting up machines... Cost Driver $20,000 25 batches Inspecting components Providing utilities.... $ 7,500 5,000 parts $10,000 5,000 machine hours