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Quality control costs

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How would one find quality control costs under two different product costing systems?
If Quality control costs were at 14.5%
Monthly direct labor costs were $27,500
And we had ABC information like:
Activity Cost Pool Cost Driver Pool Rates Quantity of Driver
Incoming Inspection Type of material $11.50 per 12 types
In-process inspection Number of units .14 per 17,500 units
Product certification Per order $77.00 25 orders

How would I figure the monthly quality costs when I use overhead through the basis of direct labor costs?
Then what would I do to figure out the quality costs though an ABC system?

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Solution Summary

This provides an example of calculating quality control costs through two methods: overhead through basis of direct labor and activity based costing.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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