Problem 12-17A (Algo) Cost allocation in a manufacturing company LO 12-1, 12-2, 12-3 Campbell Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $87,000 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,550 tents in January and 1,220 tents in February. For the entire year, the company expects to produce 15,000 tents. Required c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February?
Problem 12-17A (Algo) Cost allocation in a manufacturing company LO 12-1, 12-2, 12-3 Campbell Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program. The company pays a quality control expert $87,000 per year to inspect completed tents before they are shipped to customers. Assume that the company completed 1,550 tents in January and 1,220 tents in February. For the entire year, the company expects to produce 15,000 tents. Required c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost? d. How much of the expert's salary should be allocated to tents produced in January and February?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Problem 12-17A (Algo) Cost allocation in a manufacturing company LO 12-1, 12-2, 12-3
Campbell Manufacturing Company makes tents that it sells directly to camping enthusiasts through a mail-order marketing program.
The company pays a quality control expert $87,000 per year to inspect completed tents before they are shipped to customers.
Assume that the company completed 1,550 tents in January and 1,220 tents in February. For the entire year, the company expects to
produce 15,000 tents.
Required
c. If the cost objective is to determine the cost per tent, is the expert's salary a direct or an indirect cost?
d. How much of the expert's salary should be allocated to tents produced in January and February?
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