Question: Determine the price that would be charged using the 25% markup on manufacturing cost for one dining room table and one dining room hutch using
Determine the price that would be charged using the 25% markup on manufacturing cost for one dining room table and one dining room hutch using the proposed activity-based costing system for applying manufacturing overhead.
| Cost Pools | Annual Cost | Cost Driver | Annual Driver Value |
| Product design | $ 800,000 | Design hours | 16,000 |
| Material ordering and handling | 1,000,000 | Unique materials | 12,500 |
| Inspection | 350,000 | Inspections | 56,000 |
| Setup | 250,000 | Setups | 8,000 |
| Labor-related overhead | 800,000 | Direct labor Dollars | $1,000,000 |
| Depreciation of plant and equipment | 1,800,000 | Machine hours | 22,500 |
|
| $5.000,000 |
|
|
| Dining Room Hutch |
|
| Direct materials | $ 750 |
| Direct labor | 200 |
| Cost Drivers for 1 hutch |
|
| Number of design hours | 15 |
| Number of unique materials | 15 |
| Number of inspections | 3 |
| Number of setups | 1 |
| Machine hours | 5 |
| Dining Room Tables |
|
| Direct materials per table | $ 250 |
| Direct labor per table | 150 |
| Cost Drivers for 90 tables |
|
| Number of design hours | 10 |
| Number of unique materials | 5 |
| Number of inspections | 90 |
| Number of setups | 1 |
| Machine hours | 120 |
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