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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
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 (cast Driver Setting up wachines $17,040 24 batches Inspecting components $ 5,100 5,100 parts Providine utilities $10,2005,100 machine hours Overhead has been oppled to output at a rate of 45% of direct labor costs. The following data pertain to Job 615 Direct saterials Direct labor Batches Number of parts Machine hours $2,600 33,300 3 batches 54 parts Sachine hours Required: 2. What is the total cost of Job 615 if Business Solutions applies overhead at 45% of direct labor cost? Total cost 3. What is the total cost of Job 615 if Business Solutions uses activity-based costing? Total manufacturing cost
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