Refer to the information presented in M4-6. Suppose that Acoma manufacturers only the two products mentioned and they consume 100 percent of the company’s quality inspections. Using activity proportions, determine how much quality control cost will be assigned to each of Acoma’s product lines.
Assigning Costs Using Activity Rates Acoma Co. has identified one of its cost pools to be quality control and has assigned $125,000 to that pool. Number of inspections has been chosen as the cost driver for this pool; Acoma performs 25,000 inspections annually. Suppose Acoma manufactures two products that consume 10,000 and 15,000 inspections each. Using activity rates, determine the amount of quality control cost to be assigned to each of Acoma’s product lines.