Question
A manufacturer manufactures two types of engineering diagnostic equipment used in construction. The two products are based on different technologies, x-ray and ultrasound, but are
A manufacturer manufactures two types of engineering diagnostic equipment used in construction. The two products are based on different technologies, x-ray and ultrasound, but are manufactured in the same factory. The manufacturer has computed the manufacturing cost of the x-ray and ultrasound products by adding together direct materials, direct labor, and overhead cost applied based on the number of direct labor hours. The factory has three overhead departments that support the single production line that makes both products. Budgeted overhead spending for the departments is as follows: | ||||||
Department | ||||||
Engineering | Material Handling | Setup | Total | |||
7,500 | 6,000 | 3,500 | 17,000 | |||
Budgeted manufacturing activities and costs for the period are as follows: | ||||||
Activity | X-Ray | Ultrasound | ||||
Units produced and sold | 80 | 130 | ||||
Direct materials used | $6,000 | $10,000 | ||||
Direct labor hours used | 105 | 360 | ||||
Direct labor cost | $4,000 | $13,000 | ||||
Number of parts used | 400 | 600 | ||||
Number of engineering changes | 3 | 2 | ||||
Number of product setups | 9 | 8 | ||||
The budgeted cost to manufacture one ultrasound machine using the activity-based costing method is |
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