Information for questions 3 and 4 is given below.

Jackson Enterprises manufactures two productsA basic gizmo and an advanced model

gizmo. The company is using an activity-based costing system. They have identified

three activities for allocation of indirect costs.

Activity

Cost Driver

Cost-Allocation Rate

Materials receiving

Number of parts

$2.00 per part

Production setup

Number of setups

$500.00 per setup

Quality inspection

Inspection time

$90 per hour

A production run for the basic model is 250 units, for the advanced model, 100 units.

Each unit of product consumes the following activities:

Number of Parts

Number of Setups

Inspection Time

Basic Gizmo

10

50

10 minutes

Advanced Gizmo

15

25

20 minutes

Direct costs for the two products are as follows:

Direct Materials

Direct Labor

Basic Gizmo

$50.00

$ 75.00

Advanced Gizmo

$95.00

$125.00

3.

The amount of overhead allocated to one unit of the basic model would be

a.

$592.

b.

$35.

c.

$162.

d.

$65.

4.

The total cost of an advanced model would be

a.

$162.

b.

$65.

c.

$200.

d.

$280.