Gooding Company manufactures two models of its skillet, the Kitchen and the Campfire.The Kitchen model requires 10,000 direct labor hours and the Campfire requires 30,000 direct labor hours.The company produces 3,400 units of the Kitchen model and 600 units of the Campfire model each year.The company inspects one Kitchen for every 100 produced and inspects one Campfire for every 10 produced.The company expects to incur $84,600 of total inspecting costs this year.How much of the inspecting costs should be allocated to the Kitchen model using ABC costing?
A)$21,150
B)$30,600
C)$42,300
D)$71,910

Question

Quizplus · Accepted Answer

First, we need to calculate the total number of inspections for each model:

Kitchen: 3,400 units / 100 = 34 inspections
Campfire: 600 units / 10 = 60 inspections

Next, we need to calculate the inspection cost per unit for each model:

Kitchen: $84,600 / (34 + 60) = $840 per inspection
Campfire: $84,600 / (34 + 60) = $1,680 per inspection

Finally, we can allocate the inspecting costs to each model based on the number of inspections:

Kitchen: 34 inspections x $840 per inspection = $28,560
Campfire: 60 inspections x $1,680 per inspection = $100,800

Therefore, the inspecting costs allocated to the Kitchen model using ABC costing is $28,560.

Gooding Company Manufactures Two Models of Its Skillet, the Kitchen