Megan Industries manufactures several products including a basic case for a popular smart phone

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January 2nd, 2018

Megan Industries manufactures several products including a basic case for a popular smart phone. The company is considering adopting an activity-based costing approach for setting its budget. The company’s production activities, budgeted activity costs, and cost drivers for the coming year are as follows.ActivityActivity overhead $Cost driverCost driver quantityMachine setup$164,250# of setups730Inspection153,900# of quality tests450Materials receiving174,420# of purchase orders1,710The budgeted data for smart phone case production are as follows.Direct materials$2.70per unitDirect labor$0.57per unitNumber of setups95Number of quality tests400Number of purchase orders55Production20,750unitsCalculate the activity-based unit cost of the smart phone case.

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