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Quality Control and Associated Cost

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Calculate the monthly quality control cost to be assigned to the Satin Sheen product line under each of the following product costing systems.
1. Traditional system which assigns overhead on the basis of direct labor cost
2. Activity based accounting

Apply quality control costs uniformly to all products at a rate of 14.5% of direct labor cost.
Direct labor cost is $27,500
Activity cost pool Cost driver Pool rates quantity of driver
for satin sheen
Incoming material Type of material $11.50 12 units
Inprocess inspection # of units $.14 per unit 17,500 units
Product certification per order 77.00 per order 25 orders

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Quality control cost assigned on the basis of direct labor cost (traditional system)
Under this system the quality ...

Solution Summary

This solution calculaes the monthly quality control costs based on either a traditional costing system or an ABC costing system.