Megan Industries manufactures several products including a basic case for a popular smart phone.The company is considering adopting an activity-based costing approach for setting its budget.The company's production activities,budgeted activity costs,and cost drivers for the coming year are as follows.
$$\begin{array}{lrcr}
\underline{\textbf {Activity}}& \underline{\textbf {Activity overhead \$}}& \underline{\textbf {Cost driver}}& \underline{\textbf {Cost driver quantity}}\
\text { Machine setup } & \$ 192,000 & \text { \# of setups } & 800 \
\text { Inspection } & 175,000 & \text { \# of quality tests } & 500 \
\text { Materials receiving } & 198,000 & \text { \# of purchase orders } & 1,800
\end{array}$$ The budgeted data for smart phone case production are as follows.
$$\begin{array}{ll}
\text { Direct materials } & \$ 2.60 \text { per unit } \
\text { Direct labor } & \$ 0.59 \text { per unit } \
\text { Number of setups } & 90 \
\text { Number of quality tests } & 400 \
\text { Number of purchase orders } & 60 \
\text { Production } & 20,000 \text { units }
\end{array}$$
a.Calculate the activity rate for each cost pool.
b.Calculate the activity-based

Question

Megan Industries manufactures several products including a basic case for a popular smart phone.The company is considering adopting an activity-based costing approach for setting its budget.The company's production activities,budgeted activity costs,and cost drivers for the coming year are as follows.
 $$\begin{array}{lrcr}
\underline{\textbf {Activity}}& \underline{\textbf {Activity overhead \$}}& \underline{\textbf {Cost driver}}& \underline{\textbf {Cost driver quantity}}\
\text { Machine setup } & \$ 192,000 & \text { \# of setups } & 800 \
\text { Inspection } & 175,000 & \text { \# of quality tests } & 500 \
\text { Materials receiving } & 198,000 & \text { \# of purchase orders } & 1,800
\end{array}$$ The budgeted data for smart phone case production are as follows.
 $$\begin{array}{ll}
\text { Direct materials } & \$ 2.60 \text { per unit } \
\text { Direct labor } & \$ 0.59 \text { per unit } \
\text { Number of setups } & 90 \
\text { Number of quality tests } & 400 \
\text { Number of purchase orders } & 60 \
\text { Production } & 20,000 \text { units }
\end{array}$$ 
a.Calculate the activity rate for each cost pool.
b.Calculate the activity-based

Quizplus · Accepted Answer

The Answer of Megan Industries manufactures several products including a basic case for a popular smart phone.The company is considering adopting an activity-based costing approach for setting its budget.The company's production activities,budgeted activity costs,and cost drivers for the coming year are as follows.
 $$\begin{array}{lrcr}
\underline{\textbf {Activity}}& \underline{\textbf {Activity overhead \$}}& \underline{\textbf {Cost driver}}& \underline{\textbf {Cost driver quantity}}\
\text { Machine setup } & \$ 192,000 & \text { \# of setups } & 800 \
\text { Inspection } & 175,000 & \text { \# of quality tests } & 500 \
\text { Materials receiving } & 198,000 & \text { \# of purchase orders } & 1,800
\end{array}$$ The budgeted data for smart phone case production are as follows.
 $$\begin{array}{ll}
\text { Direct materials } & \$ 2.60 \text { per unit } \
\text { Direct labor } & \$ 0.59 \text { per unit } \
\text { Number of setups } & 90 \
\text { Number of quality tests } & 400 \
\text { Number of purchase orders } & 60 \
\text { Production } & 20,000 \text { units }
\end{array}$$ 
a.Calculate the activity rate for each cost pool.
b.Calculate the activity-based

Megan Industries Manufactures Several Products Including a Basic Case for a Popular