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Fox Hunting Gear manufactures two products: camouflage jackets and camouflage hats. The company makes 50,000 jackets and 20,000 hats each year. Information for overhead costs
Fox Hunting Gear manufactures two products: camouflage jackets and camouflage hats. The company makes 50,000 jackets and 20,000 hats each year. Information for overhead costs and for the two products appears below.
Fox Hunting Gear uses activity-based costing. What is the rate per inspection that should be used to assign inspection cost to hats or jackets? Round to 2 decimal places
| Activity | Driver | Estimated Total Overhead Cost | Jackets | Hats |
| Setups | # of setups | $ 150,000 | 750 setups | 1,500 setups |
| Ordering parts | # of parts | 300,000 | 60,000 parts | 40,000 parts |
| Machining | # of machine hours | 600,000 | 12,000 machine hrs. | 6,000 machine hrs. |
| Inspections | # of inspections | 550,000 | 15,000 inspections | 47,000 inspections |
| Shipping | # of shipments | 300,000 | 10,000 shipments | 10,000 shipments |
| Total overhead | $1,900,000 |
| A. | $27.50 per inspection |
| B. | $8.87 per inspection |
| C. | $36.67 per inspection |
| D. | $11.70 per inspection |
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Governmental And Nonprofit Accounting Theory And Practice
Authors: Robert J Freeman, Craig D Shoulders, Gregory S Allison, Terry K Patton, Robert Smith,
9th Edition
0132552728, 9780132552721
