Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following product-costing systems. (Round to the nearest dollar)
a. Traditional system, which assigns overhead on the basis of direct-labor cost
Quality-control costs = 14.5% x Direct-labor Costs
Quality-control costs assigned to Satin Sheen line = 14.5% x $27,500
= $3,988
b. Activity-based costing
Activity: | Pool Rate: | Quantity for Satin Sheen: | Assigned Cost |
Incoming material inspection | $11.50 Per Type | 12 Types | $138 |
In-Process Inspection | 0.14 Per Unit | 17.500 Units | $2,450 |
Product Certification | 77.00 Per Order | 25 Orders | $1,925 |
Total Quality-Control Costs Assigned |