Reference no: EM13125899

After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Rey found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows.

Activity Cost Driver
Setting up machines $ 19,240 26 batches
Inspecting components $ 5,400 5,400 parts
Providing utilities $ 10,800 5,400 machine hours

Overhead has been applied to output at a rate of 55% of direct labor costs. The following data pertain to Job 6.15.

Direct materials $ 2,600
Direct labor $ 3,100
Batches 6 batches
Number of parts 430 parts
Machine hours 560 machine hours

Required:
1.
Classify each of its three overhead activities as unit level, batch level, product level, or facility level.

Setting up machines
Inspecting components
Providing utilities

2.
What is the total cost of Job 6.15 if Business Solutions applies overhead at 55% of direct labor cost? (Omit the "tiny_mce_markerquot; sign in your response.)

Total cost $

3.
What is the total cost of Job 6.15 if Business Solutions uses activity-based costing? (Omit the "tiny_mce_markerquot; sign in your response.)

Total cost $