Question
ABC Corporation makes two models of robotic vacuums, S9 and J7. They allocate overhead to their products using activity-based costing. Manufacturing overhead in total is
ABC Corporation makes two models of robotic vacuums, S9 and J7. They allocate overhead to their products using activity-based costing. Manufacturing overhead in total is $1,000,000 for the year, and they have identified two activities that drive those costs. They have also identified the associated cost driver (see below). ABCs average direct labor rate per hour is $25.00.
Activities | Total overhead expense | Allocation Base | Total Amount of Allocation Base |
Machine Processing | $700,000 | Machine Hours | 20,000 hours |
Assembly | $300,000 | Direct Labor Hours | 3000 hours |
The S9 model uses $125 of direct materials. It takes 1 hour of direct labor to assemble the S9 and 3 hours of machine processing.
What is the total cost of the S9 model if ABC Corporation uses Activity Based Costing to allocate overhead to the S9? (HINT: include all costs not just overhead)
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