Question
Thornton Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has
Thornton Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Quality inspection Assembly Packing and shipping Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Activity measures for the two kinds of keyboards follow: Allocation Rate 1% of material cost $103.00 per setup $ 3.00 per part $ 1.30 per minute $ 9.00 per order Laptops Desktops Required Labor Cost $ 1,330 Material Cost $ 6,300 Number of Number of Setups Parts 26 48 Inspection Time 6,800 minutes 1,220 7,700 14 24 4,600 minutes Number of Orders 67 24
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