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ABC Inc. produces a single product and manufactured 20,000 units and sold 10,000 units last year. ABC had a practical production capacity of 20,000 units per year. The company budgeted the following overhead costs for the year:

Indirect Factory Wages:	$	140,000
Factory Utilities:	$	50,000
Factory Depreciation:	$	10,000

Direct manufacturing costs per unit are $50. The company uses an activity-based costing system which compiles costs into 3 cost pools, machining, milling and assembly. The costs allocated to these activity cost pools break down as follows:

Usage:

Cost:	Machining		Milling		Assembly
Indirect Factory Wages:	50	%	30	%	20	%
Factory Utilities:	40	%	40	%	20	%
Factory Depreciation:	10	%	90	%	0	%

The following cost drivers are used for each of the following activity cost pools:

• Machining: Machine Hours
• Milling: Milling Hours
• Assembly: Direct Labour Hours.

Practical and expected capacity for each of the cost pools are shown below:

• Machining: 91,000 Machine Hours.
• Milling: 35,500 Milling Hours.
• Assembly: 38,000 Direct Labour Hours.

Actual Usage was as follows:

• Machining: 40,000 Machine Hours.
• Milling: 80,000 Milling Hours.
• Assembly: 15,000 Direct Labour Hours.

Each unit requires a budgeted 2 Machine Hours, 1 Milling Hour and 4 Direct Labour Hours.

ABC's policy is to charge $84 per unit.

ABC's budgeted cost of goods sold using traditional costing was:

Multiple Choice

• $580,000

• $630,000

• $700,000

• $150,000