Solution-Calculate the monthly quality-control cost

Calculate the monthly quality-control cost

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Reference no: EM13553533

Rainbow Spray Paints, Inc. has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 16 percent of direct-labour cost. Monthly direct-labour cost for the enamel paint line isRs. 98,000. In an attempt to more equitably distribute quality-control costs, Rainbow is considering activity-basedcosting The monthly data shown in the following chart have been gathered for the enamel paint

Activity Cost Pool	Cost Driver	- Pool Rates	Quantity of Driverfor Enamel Paint
Incoming material inspection	Type of material	Rs. 23.00 per type	24 types
In-Process inspection	Number of units	Rs. 0.28 per unit	35,000 units
Product certification	Per order	Rs. 144.00 per order	50 orders

Required: Calculate the monthly quality-control cost to be assigned to the enamel paint line under each of the following product-costing systems.

a. Traditional system which assigns overhead on the basis of direct-labour cost.

b. Activity-based costing.

Reference no: EM13553533

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Calculate the monthly quality-control cost

Reference no: EM13553533

Reference no: EM13553533

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