Plaid Manufacturing Co. produces two products: G1 and M1. The company uses an ac
ID: 2609388 • Letter: P
Question
Plaid Manufacturing Co. produces two products: G1 and M1. The company uses an activity based costing system. The following are the activities, budgeted total cost and cost drivers per activity for the year 20x9:
Activity
Budgeted Cost
Cost Base
Cost Base Volume
Assembly
$878375
# of DL hours
35836
Inspection
$650181
# of units
22538
Shipping
$321938
# of batches
199
Budgeted data relating to the production of M1 for 20x9 is given below:
Number of units
1500
Units per batch
75
Direct labour hours (@ $18 per hour)
18001 hours
Direct materials (@ $13.12 per kg.)
888 kg.
What is the total cost of producing M1 in 20x9?
Select one:
a. $852518
b. $528500
c. $941496
d. $516850
Activity
Budgeted Cost
Cost Base
Cost Base Volume
Assembly
$878375
# of DL hours
35836
Inspection
$650181
# of units
22538
Shipping
$321938
# of batches
199
Explanation / Answer
Option d. $516850 is correct answer.
Plaid Manufacturing Co. Total cost of producing M1 in 20x9 Particulars Amount Direct materials ($650181 x 1500 / 22538) $43,272 Direct labour ($878375 x 18001 / 35836) $441,222 Shipping Costs {($321938/199) x (1500/75)} $32,356 Total cost of producing M1 in 20x9 $516,850