Question
ational Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Model Annual Sales in Units High F
ational Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.
Model | Annual Sales in Units |
High F | 10,000 |
Great P | 16,000 |
National uses a volume-based costing system to apply factory overhead based on direct labor dollars. The unit prime costs of each product were as follows:
High F | Great P | |||||
Direct materials | $ | 38.00 | $ | 25.40 | ||
Direct labor | $ | 17.52 | $ | 13.14 | ||
Budget factory overhead: | |||||
Engineering and Design | 2,409 | engineering hours | $ | 404,712 | |
Quality Control | 12,848 | inspection hours | 269,808 | ||
Machinery | 33,726 | machine hours | 539,616 | ||
Miscellaneous Overhead | 26,400 | direct labor hours | 134,904 | ||
Total | $ | 1,349,040 | |||
National's controller had been researching activity-based costing and decided to switch to it. A special study determined National's two products have the following budgeted activities:
High F | Great P | ||
Engineering and design hours | 969 | 1,440 | |
Quality control inspection hours | 5,648 | 7,200 | |
Machine hours | 20,286 | 13,440 | |
Labor hours | 12,000 | 14,400 | |
Using activity-based costing, applied miscellaneous overhead for the Great P model per unit is
-
$4.60.
-
$9.45.
-
$13.44.
-
$15.12.
-
$42.61.
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