Quantity of Driver Activity Cost Pool Cost Driver Pool Rates for Satin Sheen Incoming material inspection . Type of material . $11.50 per type . 12 types In-process inspection Number of units .14 per unit 17,500 units 77.00 per order . 25 orders Product certification Per order
Urban Elite Cosmetics has used a traditional cost accounting system to apply quality-control costs uniformly to all products at a rate of 14.5 percent of direct-labor cost. Monthly direct-labor cost for Satin Sheen makeup is $27,500. In an attempt to more equitably distribute quality-control costs, management is considering activity-based costing. The monthly data shown in the following chart have been gathered for Satin Sheen makeup.
Required:
1. Calculate the monthly quality-control cost to be assigned to the Satin Sheen product line under each of the following product-costing systems. (Round to the nearest dollar.)
a. Traditional system, which assigns
b. Activity-based costing.
2. Does the traditional product-costing system overcost or undercost the Satin Sheen product line with respect to quality-control costs? By what amount?
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