Inc. manufactures three variations of chairs and sells them to a variety of furniture retail chains. Product 8 is the company’s base model made out of wood, glue, and screws with no customization. Product 9 is made out of the same materials but is highly customized based on customer specifications. Products 8 and 9 are primarily manufactured by hand. Product 10 is made out of the same materials , but requires a height adjustment device made of metal. Inc. machines and assembles the device in-house using robotics specifically designed for this device. The cost of manufacturing the height adjustment device for Product 10 is as follows:

Direct Labor	$2.00
Direct Materials	40.00
Variable Overhead ($10 per direct labor hour	2.00
Fixed Overhead ($14 per direct labor hour)	3.00
Total Cost	$47.00

Recently, an outside supplier has offered to sell the device for Product 10 to Inc. for $50

a) For each product, create a list of the types of costs and departments likely to be associated with the manufacture of the Product?

b) Recommend improvements that Inc. should make to its current costing system for Product 10.

c) Which costing system (job, process, or activity-based) would be best for each separate product. Explain.

Answer rating: 100% (QA)

a Product 8 Direct labor Direct materials Variable overhead Fixed overhead Product 9 Direct labor Di... View the full answer