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Taylor Inc. uses a volume-based costing system that applies overhead cost based on direct labor hours at $250 per direct labor hour. The company is
Taylor Inc. uses a volume-based costing system that applies overhead cost based on direct labor hours at $250 per direct labor hour. The company is considering adopting an activity-based costing system with the following data Activity Area Materials handling Machine runs Milling Grinding Cost Driver Cost Driver Rate # of parts 2.5 # of turns 0.6 # of machine hours 20.0 # of parts 1.5 # of units tested 15.0 Testing The two jobs processed in the month of June had the following characteristics: Job 101 $20,000 Direct material costs Direct labor costs # of direct labor hours # of parts # of turns # of machine hours # of units tested $2,000 50 1,000 20,000 150 20 Job 102 $60,000 $30,000 500 3,000 50,000 1,000 250
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