Mr. Bob is running a furniture brand ClassicWoods for last 8 years. Now with the growing business, he wants to make improvements in the accounting system which he used to do himself and hires John for the purpose.

The total budgeted manufacturing overheads cost for running year is $4,434,211 & total labour hours are 15,000.

There are two kinds of Cupboard manufactured by ClassicWoods, A-type with premium wood and 5 sections and B-type with normal quality & 3 sections. Modern Dcor recently placed an order for 100 units of the A-type cupboard. The order is expected to be delivered in 2 months.

You sat down with the chief engineer to identify the activities which the firm undertakes in its cupboard division. Then activity wise cost, its most relevant driver and rate is calculated and summarised as:

Activity	Amount ($)	Cost Driver	Value	Amount/value ($)
Production of components	1,50,444	Machine hours	20,000	7.52
Assembly of components	920,000	Number of labour hours	15,000	61.33
Packaging	178,254	Units	3,500	51
Shipping	185,788	Units	3,500	53
Setup costs	27,868	Number of setups	190	146.67
Designing	99,498	Designer hours	910	109.34
Product testing	18,110	Testing hours	400	45.28
Rent	985,372	Labour cost	$640,491	65%

A summary has been prepared with the list of activities and total cost incurred when the order becomes ready to be packed, shown as below:

Customer: Modern Dcor Units: 100 All amounts in $
Cost of direct materials		20,000
Cost of purchased components		30,000
Labour cost		12,800
Activity	Relevant Cost Driver	Activity Usage
Production of components	Machine hours	300
Assembly of components	Number of labour hours	210
Packaging	Units	120
Shipping	Units	120
Setup costs	Number of setups	15

Customer: Modern Decor

Units:100

All amount in dollar

Designing	Designer hours	55
Testing	Testing hours	18
Rent	Labour cost	4100

calculate the order cost using activity-based costing.