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The James Bond Company makes cars and watches. Information about the company is as follows: cars watches direct material $ 5 , 0 0 0

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

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