Question

Plaid Manufacturing Co. produces two products: G1 and M1. The company uses an activity based costing system. The following are the activities, budgeted total cost and cost drivers per activity for the year 20x9:

Activity	Budgeted Cost	Cost Base	Cost Base Volume
Assembly	$878375	# of DL hours	35836
Inspection	$650181	# of units	22538
Shipping	$321938	# of batches	199

Budgeted data relating to the production of M1 for 20x9 is given below:

	Number of units	1500
	Units per batch	75
	Direct labour hours (@ $18 per hour)	18001 hours
	Direct materials (@ $13.12 per kg.)	888 kg.

What is the total cost of producing M1 in 20x9?

Select one:

a. $852518

b. $528500

c. $941496

d. $516850

Answer 1

--Correct Answer = Option 'a' $ 852,518

Cost of producing M1
Direct Material	$11,651
Direct Labor cost	$324,018
Assembly cost	$441,222
Inspection cost	$43,272
Shipping Cost	$32,356
Total cost of producing	$852,518 ANSWER

--Workings

Cost of producing M1
Direct Material	=888*13.12
Direct Labor cost	=18001*18
Assembly cost	=+(878375/35836)*18001
Inspection cost	=+(650181/22538)*1500
Shipping Cost	=+(321938/199)*20 batches