Urban Elite Cosmetics has used a traditional cost accounting system to apply quality - control costs uniformly
Question:
Urban Elite Cosmetics has used a traditional cost accounting system to apply qualitycontrol costs uniformly to all products at a rate of percent of directlabor cost. Monthly directlabor cost for Satin Sheen makeup is $ In an attempt to more equitably distribute qualitycontrol costs, management is considering activitybased costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup.
Activity Cost Pool Cost Driver Pool Rates Quantity of Driver for Satin Sheen
Incoming material inspection Type of material $ per type types
Inprocess inspection Number of units per unit units
Product certification Per order per order orders
Required:
Calculate the monthly qualitycontrol cost to be assigned to the Satin Sheen product line under each of the following productcosting systems.
Traditional system, which assigns overhead on the basis of directlabor cost.
Activitybased costing.
Does the traditional productcosting system overcost or undercost the Satin Sheen product line with respect to qualitycontrol costs? By what amount?
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton