Intel Corporation is considering implementing Activity-Based Costing (ABC). The following activities and costs are identified:
•Machine setup: $240,000
•Quality control: $190,000
•Packaging: $140,000
Activity drivers:
•Machine setups: 40
•Quality inspections: 150
•Packaging hours: 450
Required:
1.Calculate the cost per activity driver.
2.Determine the total cost assigned to each product using ABC.
3.Compare the results with traditional costing methods and discuss the benefits of ABC.