Camarillo Company uses a volume-based costing system that applies overhead cost based on machine hours at...
Camarillo Company uses a volume-based costing system that applies overhead cost based on machine hours at $15 per machine hour.
The Company is considering adopting an activity-based costing system with the following data:
| Activity | Cost Driver | Rate |
| Materials handling | Pounds of material | $1.20 |
| Lathe work | Number of parts | 0.80 |
| Milling | Number of machine hours | 6.00 |
| Grinding | Number of turns | 0.10 |
| Testing | Number of units tested | 9 |
The two jobs processed in the month of May had the following characteristics:
| Job A | Job B | ||
| Direct material | $12,000 | $60,000 | |
| Direct labor | $4,000 | $12,000 | |
| Pounds of material | 800 | 1,600 | |
| Number of parts | 300 | 1,500 | |
| Number of turns | 10,000 | 30,000 | |
| Number of machine hours | 240 | 800 | |
| Number of units in each job | 40 | 160 | All units tested |
Q. The difference in total cost between ABC and the volume-based costing system for Job A is:
a)$400
b)$360
c)$500
d)$760
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Camarillo Company uses a volume-based costing system that
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