Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 63

ABC and Job-Costing Working with Unknowns North Company designs and manufactures machines that facilitate DNA sequencing. Depending on the intended purpose of each machine and its functions, each machine is likely to be unique. The job-order costing system in its Norfolk plant has five activity cost pools, in addition to direct materials and direct labor. Job TPY-2306 requires 1,000 printed-circuit boards. The cost per board that passes the final inspection is $240. On average, only 50 percent of the completed units pass the final inspection. The prime costs per completed board are direct materials $25 and direct labor $5. Information pertaining to manufacturing overhead for printed-circuit boards follows:

Activity Cost Pool	Cost Driver	ActivityDriver Rate	Unit of CostDriveper Board	FactoryOverhead per Board
Axial insertion	Number of axial insertions	$0.20	25	$A?
Hardware insertion	Number of hardware insertions	2.00	B?	37.00
Hand load	Boothroyd time	C?	5	35.50
Masking	Number of points masked	0.12	100	D?
Final test	Test time	E?	10	5.00

Required Fill in the unknowns identified as A through E.

Step 1 of 2

Activity based costing method which is commonly known as ABC method, is a costing method where indirect cost is assigned to product on the basis of activities identified, used in producing the product.