Question: Computing product cost with given activity allocation rates Using automated production processes, Stegall Videos produces two kinds of digital camcorders: N100 for the novice and

Computing product cost with given activity allocation rates Using automated production processes, Stegall Videos produces two kinds of digital camcorders: N100 for the novice and D200 for the hobbyist. The company has found activity-based costing useful in assigning overhead costs to its products. It has identified the following five major activities involved in producing the camcorders.

Allocation Base Allocation Rate Activity Materials receiving and handling Production setup Assembly Quality inspection P

Activity measures for the two kinds of camcorders follow.

Computing product cost with given activity allocation rates Usin

Required
a. Compute the cost per unit of N100 and D200, assuming that Stegall made 1,000 units of N100 and 500 units of D200.
b. Explain why the D200 camcorders cost more to make although their direct costs are less than those for the N100 camcorders.

Allocation Base Allocation Rate Activity Materials receiving and handling Production setup Assembly Quality inspection Packing and shipping Cost of materials Number of setups Number of parts Inspection time Number of orders 3% of materials cost $800 per setup $10 per part $25 per minute $80 per order

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