Direct materials		50,000
Direct labor		38,400
Indirect production costs		21,120
Total cost		109,520

Activity

Cost-Allocation Base

Predicted 20X0 Cost (000)

Receiving Direct materials cost 3,500

Assembly Number of control units 11,960

Quality control QC hours 2,015

Shipping Number of boxes shipped 3,645

TOTAL 21,120

In 20X0 the Automotive Controls Department expects to produce 92,000 control units, use 650 quality control hours, and ship 8,100 boxes.

Suppose Kato prices its products at 15% above total production cost. An order came in from Nissan for 3,000 control units. Ogawa estimates that filling the order will require 6,000,000 of direct-materials cost and 2,200,000 of direct labor. It will require 55 hours of QC inspection time and will be shipped in 620 boxes. a) Compute the price charged for the 3,000 control units if Kato uses its traditional cost accounting system. Start by calculating the expected cost of the order if Kato uses its traditional cost accounting system. (Leave any unused cells blank.)

Estimated cost of production:		(in Yen)
	Direct materials		6000000
	Direct labor		2200000
	Indirect production costs
	Total production cost - Traditional cost system

How do you find indirect production cost?