Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied quality control factory overhead for the 1,000 laser printers order is:
A)$7,800.
B)$10,000.
C)$10,500.
D)$150.
E)$21,600.

Question

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied quality control factory overhead for the 1,000 laser printers order is:
A)$7,800. 
B)$10,000. 
C)$10,500. 
D)$150. 
E)$21,600.

Quizplus · Accepted Answer

Using activity-based costing, the total overhead cost for the 1,000 laser printers order can be calculated by multiplying the expected cost per unit for each of the overhead cost driver activities by the number of units ordered and then summing the results.

Expected cost of quality control per unit = $10.50 ($7,000 ÷ 667 units)
Expected cost of machine setup per unit = $1.50 ($3,000 ÷ 2,000 units)
Expected cost of materials handling per unit = $3.00 ($6,000 ÷ 2,000 units)

Total overhead cost per unit = $15.00 ($10.50 + $1.50 + $3.00)

Total overhead cost for 1,000 units = $15.00 x 1,000 = $15,000

Therefore, the answer is C) $10,500, which is the expected cost of quality control multiplied by the number of units ordered (1,000 units).

Sheen Co Manufacturers Laser Printers