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Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special

Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers:

Activity

Expected Cost

Activity Driver

Activity Capacity

Engineering

$1,000,000

engineering hours

5,000 hours

Setups

$ 900,000

setups

200 setups

Machining

$2,000,000

machine hours

25,000 machine hours

Inspection

$ 800,000

inspection hours

2,500 inspection hours

Owens produces two models: Model X and Model Y. The following table shows how the two products consume activity.

Model C

Model D

Units completed

300,000

200,000

Engineering hours

1,000

4,000

Setups

80

120

Machine hours

20,000

5,000

Inspection hours

1,500

1,000

First determine the overhead costs assigned to model D using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. (Round to two decimal places.)The engineering cost assigned to model D would be

a.

$1,253,320.

b.

$626,650.

c.

$1,879,970.

d.

$3,133,333.33.

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