Samantha is the controller for Tasty Jerky, company that manufactures vegan jerky and currently has two flavors: Cajun and BBQ. Samantha believes that Tasty Jerky is in a great position to transition to Activity-Based Costing (ABC) from a traditional costing system. Tasty Jerky is planning to produce 77,670 bags of Cajun jerky and 81,400 bags of BBQ jerky. Management has asked Samantha to compile costing data using ABC. She has identified the following key activity information:
Moving and Sorting Ingredients $98,444 (146,800 pounds)
Quality Control $264,306 (14,500 inspections)
Each product will require the following amount of each key activity:
In addition, Cajun will need $99,430.00 of Direct Materials and $128,900.00 of Direct Labor while BBQ will need $103,220.00 of Direct Materials and $139,800.00 of Direct Labor. Determine the total production costs for Cajun jerky under the ABC system. (If required, round calculations to two decimal places.)
A) $282,568.50
B) $385,788.50
C) $388,942.50
D) $396,688.50

Question

Samantha is the controller for Tasty Jerky, company that manufactures vegan jerky and currently has two flavors: Cajun and BBQ. Samantha believes that Tasty Jerky is in a great position to transition to Activity-Based Costing (ABC) from a traditional costing system. Tasty Jerky is planning to produce 77,670 bags of Cajun jerky and 81,400 bags of BBQ jerky. Management has asked Samantha to compile costing data using ABC. She has identified the following key activity information:
Moving and Sorting Ingredients $98,444 (146,800 pounds)
Quality Control $264,306 (14,500 inspections)
Each product will require the following amount of each key activity:
 In addition, Cajun will need $99,430.00 of Direct Materials and $128,900.00 of Direct Labor while BBQ will need $103,220.00 of Direct Materials and $139,800.00 of Direct Labor. Determine the total production costs for Cajun jerky under the ABC system. (If required, round calculations to two decimal places.)
A) $282,568.50 
B) $385,788.50 
C) $388,942.50 
D) $396,688.50

Quizplus · Accepted Answer

This question requires calculation of the activity rate for each of the manufacturing overhead (MOH) activities: Moving and Sorting Ingredients- $98,444/146,800 pounds = $0.67/pound and Quality Control- $264,306/14,500 inspections = $18.23/inspection. Next, calculate the total overall MOH costs for bags of Cajun jerky: ($0.67 × 87,350 pounds) + ($18.23 × 5,600 inspections) = $58,524.50 + $102,088.00 = $160,612.50. Lastly, add the total Cajun jerky MOH costs to the direct materials and direct labor costs used by the Cajun jerky: $160,612.50 + $99,430.00 + $128,900.00 = $388,942.50 (Choice C).
This is not the question. What is total ABC -based cost allocated to Cajun jerky not, what is the total production cost of Cajun Jerky.
I have updated the question to better reflect what was intended to be ask.

Samantha Is the Controller for Tasty Jerky, Company That Manufactures