The James Bond Company makes cars and watches. Information about the company is as follows:

cars watches

direct material $$5,000$ $$1,000$

labor hours $93$

labor rate per hour $$20$ $$20$

number made and sold $20007000$

Overhead:

rent on factory where both made $$300,000$

lathe $$100,000$

diagnostic machine $$100,000$

inspection $$200,000$

Part $1$: determine the cost of a car and a watch if James Bond uses labor hours to allocate overehead

Part $2$: James Bond has decided to use Activity based Costing and has determined the following:

Rent labor hours

lathe $1$ hour per watch $3$ hours per car

diagnostic machine $2$ hours per watch $2$ hours per car

inspection $1$ hour per watch $1/2$ hour per car

DETERMINE THE COST OF A CAR AND A WATCH USING ACTIVITY BASED COSTING