Question 3: Activity Based Costing

KPhone produces quality smart phones. Its factory produces two popular models: the KPhone Pro and the KPhone Pro Max. At the beginning of the year, the following planned production information was tabled to assist in cost planning:

Pro Max Pro Quantity planned 100,000 800,000 Selling Price $1,650.00 $900.00 Unit prime cost $530.00 $483.00 In addition, the following information was provided for calculating overhead costs for each phone. Activity Name Activity Driver Total Activity Cost Pro Max Pro Setups Number of setups $20,000,000.00 500 200 Machining Machine hours $60,000,000.00 100,000 400,000 Engineering Engineering hours $9,000,000.00 200,000 200,000 Packing Packing orders $1,000,000.00 200,000 800,000