Question

Gold Shoes Company manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers: Overhead Cost Pool Cost Driver Overhead Cost Budgeted Level for Cost Driver Budgeted Quality Control Number of inspections $ 85,500 900 Machine Time Machine hours 217,000 700 Materials Handling Number of Batches 12,500 125 Miscellaneous Overhead Cost Direct labor hours 63,000 5,500 Gold Shoes Company has an order for cleats that has the following production requirements: Number of Inspections 600 Number of Machine hours 370 Number of Batches 8 Direct Labor Hours 1,480 Using activity-based costing, applied quality control factory overhead for the baseball cleat order is:

Answer 1

To calculate the applied quality control factory overhead for the baseball cleat order using activity-based costing, divide the total budgeted cost for quality control by the budgeted number of inspections to get the rate per inspection. As a result, the applied quality control overhead is $57,000.

Step-by-step explanation:

The student is asking to calculate the applied quality control factory overhead for an order of baseball cleats using activity-based costing (ABC). To find this, we first need to determine the overhead rate for the quality control cost pool. We do this by dividing the total budgeted quality control costs by the budgeted level for the cost driver. The total budgeted cost for quality control is $85,500, and the budgeted number of inspections is 900. Therefore, the rate is $85,500 ÷ 900 = $95 per inspection.

Next, we apply this overhead rate to the number of inspections required for the cleats order, which is 600. So, the applied quality control overhead for the order is 600 inspections × $95 per inspection = $57,000.