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ABC Ltd has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 20 per cent
ABC Ltd has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 20 per cent of direct labour cost. The monthly direct labor cost for the satin sheet range is $160 000. In an attempt to distribute quality control costs more equitably, ABC is considering activity-based costing. The following data relates to monthly quality control costs for its satin sheet range: Cost per unit of Quantity of Activity Activity driver activity activity driver driver Incoming material Type of material $34.50 per type inspection In-process inspection Number of units $0.50 per unit 35 000 units Product certification Number of orders $216 per order 50 orders Calculate the monthly quality control cost to be assigned to the satin sheet product line under the traditional system that assigns overhead on the basis of direct labour costs. 24 types Select one: a. None of the answers given b. $32,000 C. $35,000 d. $37,000
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