Assigning Costs Using Activity Rates
Newkirk Co. has identified one of its cost pools to be quality control and has assigned $50,000 to that pool. Number of inspections has been chosen as the cost driver for this pool; Newkirk performs 25,000 inspections annually. Suppose Newkirk manufactures two products that consume 10,000 and 15,000 inspections each. Using activity rates, determine the amount of quality control cost to be assigned to each of Newkirk's product lines.
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