Using automated production processes, Quinton 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.

Activity measures for the two kinds of camcorders follow.

Required
a. Compute the cost per unit of N100 and D200, assuming that Quinton made 5,000 units of N100 and 2,500 units of D200.
b. Explain why the D200 camcorders cost more to make although their direct costs are less than those for the N100camcorders.

Transcribed Image Text:

Activity Allocation Base Allocation Rate 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 S10 per part $25 per minute 80 per order Labor Cost Materials NumberNumber Inspection Number of Parts Cost of Setups Time of Orders N100 S250,000 D200 $140,000 180,000 10 25 10,000 10,000 800 min 4,800 min. 25 50 160,000 *Both are direct costs.