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

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

Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 615.

Direct materials $ 2,500 Direct labor $ 3,500 Batches 2 batches Number of parts 400 parts Machine hours 600 machine hours

Required:

1. Classify each of its three overhead activities as unit level, batch level, product level, or facility level.

2. What is the total cost of Job 615 if Business Solutions applies overhead at 50% of direct labor cost?

3. What is the total cost of Job 615 if Business Solutions uses activity-based costing?