Calculate the quality control costs incurred per unit

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Reference no: EM133104823

Question - Trento Ltd manufacture three products: the Wick, the Vick and the Bick. Monthly production of the products are as follows:

 

Production (units)

Batch sizes

Wick

500

10

Vick

400

10

Bick

20

1

Every product produced will pass through the quality control department. The monthly costs of the quality control department are as follows:

Set up costs for the testing machines £2,500

(Cost driver: no of set ups)

Inspection £2,900

(Cost driver: inspection time)

The testing machines can test all the products in a maximum batch size of 10. After each 10 units tested, the machine has to be set up again. Inspection time is 1 minute per unit for the Wick and the Vick and 2 minutes per unit for the Bick.

Required - Using Activity Based Costing, calculate the quality control costs incurred per unit of the Wick.

Reference no: EM133104823

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