A company has identified the folloing overhead costs and cost drivers for the coming year:
Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level
Machine setup Number of setups $20,000 200
Inspection Number of inspections 130,000 6,500
Material handling Number of material moves 80,000 8,000
Engineering Engineering hours 50,000 1,000
Estimated direct labor cost was $100,000 and Estimated direct materials cost was $280,000. The following information was collected on three jobs that were completed during the year:
Job 101 Job 102 Job 103
Direct materialls $5,000 $12,000 $8,000
Direct labor $2,000 $2,000 $4,000
Units completed 100 50 200
Number of setups 1 2 4
Number of inspections 20 10 30
Number of material moves 30 10 50
Engineering hours 10 50 10
The comapny desires a mark up of 40%. If the company uses activity based costing (ABC), the price of each unit of JOB 103 would be:
A. $98
B. $100
C. $116 This answer is incorrect
D. $140
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