Testbank Exercise 2

Megan Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The companys production activities, budgeted activity costs, and cost drivers for the coming year are as follows.

Activity		Activity overhead $		Cost driver		Cost driver quantity
Machine setup		$212,960		# of setups		880
Inspection		171,000		# of quality tests		450
Materials receiving		180,250		# of purchase orders		1,750

The budgeted data for smart phone case production are as follows.

Direct materials		$2.80	per unit
Direct labor		$0.55	per unit
Number of setups		87
Number of quality tests		402
Number of purchase orders		58
Production		18,720	units

Calculate the activity-based unit cost of the smart phone case. (Round answer to 2 decimal places, e.g. 1.64.)