Question

Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $648,000 payroll for 8,400 direct labor-hours. Listed below is cost driver information used in the product-costing system:

Overhead Cost Pool	Budgeted Overhead			Cost Driver		Estimated Cost Driver Level
Machine setups	$	1,599,200		# of setups		300	setups
Materials handling		115,200		# of barrels		9,600	barrels
Quality control		1,218,000		# of inspections		2,900	inspections
Other overhead cost		1,008,000		# of machine hours		21,000	machine hours
Total overhead	$	3,940,400

A current product order has the following requirements:

Machine setups	27	setups
Materials handling	714	barrels
Quality inspections	89	inspections
Machine hours	1,650	machine hours
Direct labor hour	552	hours

Using ABC, how much quality control overhead is assigned to the order?

Multiple Choice

• $431,784.

• $9,610.

• $10,408.

• $37,380.

• $45,233.

Answer 1

Quality Control cost Per Unit = Budgeted Quality control / Estimated Cost Driver

Quality cost Per Unit = 1,218,000 /2,900 =420Per inspection

Quality Control Cost Assigned = 420*89= $37,380(Answer)