Professional Documents
Culture Documents
a
Monthly direct labor cost for the namel paint line $110000
Quality control cost(Traditional) 19800
1.b
Activity cost pool Cost Driver Pool rates
Incoming material inspection Type of material $30/type
In-process inspection Number of units 0.30 /unit
Product certification Per order 150/order
2. Traditional cost<Activity based cost, hence traditional product costing system undercosts the quality control cost by
1.b
Quantity of driver for enamel paint Amount
30 types 900
40,000 12000
60 9000
Total 21900
Difference 2100
rcosts the quality control cost by $2100 or there is 10.6% increase with activity based costing