Question
Trento Ltd manufacture three products: the Wick, the Vick and the Bick. Monthly production of the products are as follows: Production (units) Batch sizes Wick
Trento Ltd manufacture three products: the Wick, the Vick and the Bick. Monthly production of the products are as follows: Production (units) Batch sizes Wick 500 10 Vick 400 10 Bick 20 1 Every product produced will pass through the quality control department. The monthly costs of the quality control department are as follows: Set up costs for the testing machines 2,500 (Cost driver: no of set ups) Inspection 2,900 (Cost driver: inspection time) The testing machines can test all the products in a maximum batch size of 10. After each 10 units tested, the machine has to be set up again. Inspection time is 1 minute per unit for the Wick and the Vick and 2 minutes per unit for the Bick. Required: Using Activity Based Costing, calculate the quality control costs incurred per unit of the Wick.
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