Question
Information pertaining to Radakovich Corporations estimated manufacturing overhead for 2022 is given below. Radakovich uses an activity-based costing (ABC) system to assign manufacturing overhead to
Information pertaining to Radakovich Corporations estimated manufacturing overhead for 2022 is given below. Radakovich uses an activity-based costing (ABC) system to assign manufacturing overhead to products. Among its products is G12B, that the company only manufactures for special orders. BobCo Inc. has requested a bid on 1,000 units of G12B. Radakovichs production managers estimate the order to require 200 machine-hours; 4,500 parts; and 200 inspection-hours. This product's direct costs are estimated to equal $100.00 per unit.
Activity Activity Rate Cost Driver
Assembly $30.00 number of machine hours
Material Handling $2.00 number of parts
Inspection $70.00 number of inspection-hour
Activity Rates are quoted per unit of cost driver activity.
A Radakovich engineer has suggested that a new software program that costs $4,200 could save 45% of the inspection hours on the BobCo order. What is the total net manufacturing cost savings if the software is purchased and used on this order? (Round to the nearest $1.00, Net Costs Savings > 0 should be entered as a positive number.)
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