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New Rage Cosmetics has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 14.5% of

New Rage Cosmetics has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 14.5% of direct labor cost.Monthly direct labor cost for Satin Sheen makeup is $27,500.In an attempt to distribute quality control costs more equitably, New Rage is considering activity-based costing.The monthly data shown in the chart below have been gathered for Satin Sheen.

Activity

Cost Driver

Cost Rates

Quantity for

Satin Sheen

Incoming material inspection

Type of material

$11.50 per type

12 types

In-process inspection

Number of units

$0.14 per unit

17,500 units

Product certification

Per order

$77per order

25 orders

The monthly quality control cost assigned to Satin Sheen makeup using activity-based costing is

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