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2. Jackson Enterprises manufactures two products-a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three
2. Jackson Enterprises manufactures two products-a basic gizmo and an advanced model gizmo. The company is using an activity-based costing system. They have identified three activities for allocation of indirect costs. Activity Materials receiving Production setup Quality inspection Cost-Allocation Rate $2.00 per part Cost Driver Number of parts Number of setups Inspection time $500.00 per setup $90 per hour A production run for the basic model is 250 units, for the advanced model, 100 units. Each unit of product consumes the following activities: Number of Parts Basic Gizmo 10 Advanced Gizmo 15 Number of Setups 1 setup per production run 1 setup per production run Direct costs for the two products are as follows: Inspection Time 10 minutes 20 minutes Direct Materials Basic Gizmo $50.00 Advanced Gizmo $95.00 The total cost of an advanced model would be a. $285 b. $65. C. $200. d. $162. Direct Labor $ 75.00 $125.00
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