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Dynamic Doors Ltd. (Dynamic) has been using a job order costing system to allocate overhead to products using direct labour costs. The controller for Dynamic
Dynamic Doors Ltd. (Dynamic) has been using a job order costing system to allocate overhead to products using direct labour costs. The controller for Dynamic has recently learned about activity-based costing and has collected information on the following activities used in manufacturing its doors for the upcoming period: Activity Cost driver Budgeted cost Budgeted activity Materials handing it of machine turns $40,000 4,000 machine turns Machine setup # of setups $20,000 100 setups Quality control it of inspections $55,000 1,500 inspections Design # of design hours $85,000 10,000 design hours Total budgeted direct labour costs for the period are $300,000. The following information is available for a set of doors to be completed for one of Dynamic's new customers, a local restaurant Direct materials $ 5.000 Direct labour $10,000 it of machine tums 2 f? of setups 1 it of inspections 3 it of design hours 300 Required: a) Using the job order costing method, calculate Dynamic's total cost for the new restaurant doors. (3 marks) b) Using activity-based costing, calculate Dynamic's total cost for the new restaurant doors
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