Based on the same data given in Workout Problem 3: Recalling…
Based on the same data given in Workout Problem 3: Recalling the ABC (Activity-Based Costing) from his education at Mason, the company’s controller, Claire, proposed the use of a new costing system, ABC, for computing the costs of each product line. Its activity-based costing system uses two indirect-cost pools. One cost pool is for setup costs (which is $145,800 in total) and the other for general manufacturing overhead (which is also $145,800 in total). It allocates setup costs to the two lamps based on setup labor-hours and general manufacturing overhead costs on the basis of direct manufacturing labor-hours. The budgeted cost information is as follows: Basic Lamps Designer Lamps Total Direct materials per lamp $ 5 $ 21 Direct manufacturing labor per lamp 0.5 hours 0.8 hours Direct manufacturing labor rate per hour $ 30 $ 30 Setup costs $145,800 Lamps produced per batch 210 34 Setup labor-hours per batch 1 hour 2 hours General manufacturing overhead costs $145,800 Calculate the budgeted costs of the basic and designer lamps using the new, ABC system Basic Lamps Designer Lamps Direct materials Direct manufacturing labor Setup costs allocated General manufacturing overhead costs allocated Total costs