Question

# Plaid Manufacturing Co. produces two products: G1 and M1. The company uses an activity based costing...

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

--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

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