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Problem: Williamson fabricators completed two jobs in June. The recorded the cost assigned to the jobs by the company's activity based costing system:
Job 622 required 2,500 parts, 55,000 lathe turns and 1,200 machine hours. All 325 of the jobs output units of job 409 where tested.
Requirements
Question 1: How do you know that at least one of the costs recorded for the two jobs is accurate?
Question 2: Disregard materials handling costs. How many parts were used for Job 409? How many lathe turns did job 409 require? How many machine hours? How many units were produced in job 409? Begin by determining the allocation rate each of the four activities. Identify the formula, then compute the rate for each activity. (Round answer your nearest cent)
Question 3: A nearby company has offered to test all product units for $17 each. On the basis of the ABC data, should Williamson Fabricators accept or reject the offer? Give reasons.
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