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Help Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate
Help Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200% Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows: Pool Number of00S50 setups Machine Setups Quality Control Number of Other Overhead 400 180,000 inspections Machine 30,000 hours $480,000 Information (on a per unit basis) related to three popular products at Njombe are as follows 136 $540 Model #58 $310 Direct material cost $400
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