National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:
Using activity-based costing,applied quality control factory overhead for the High F model per unit is (rounded to the nearest cent):
A)$6.13.
B)$11.86.
C)$16.28.
D)$32.46.
E)$66.73.

Question

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders. 
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows: 
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities: 
Using activity-based costing,applied quality control factory overhead for the High F model per unit is (rounded to the nearest cent):
A)$6.13. 
B)$11.86. 
C)$16.28. 
D)$32.46. 
E)$66.73.

Quizplus · Accepted Answer

According to the activity-based costing, the total quality control factory overhead cost for the High F model is $1,543,200. 
The cost driver for quality control for the High F model is Number of Inspections, which is 1800. 
Therefore, the cost per unit for quality control factory overhead for the High F model would be: 
$1,543,200 / (1800 units x $80) = $10.7647, which rounded to the nearest cent is $10.77. 
Adding this cost to the unit prime cost of $191.43, we get a total cost per unit of: 
$191.43 + $10.77 = $202.20 
Therefore, the applied quality control factory overhead per unit for the High F model using activity-based costing is $10.77, which rounded to the nearest cent is B) $11.86.