ACCA Applied Knowledge · Management Accounting · Alternative cost accounting principles
A company's quality inspection cost pool is $60,000 and its driver is the number of inspections. Product A required 150 inspections, product B 250 inspections, and product C 100 inspections. How much of the quality inspection cost is charged to product B?
Total inspections are 500, so the rate is $60,000 divided by 500, or $120 per inspection. Product B had 250 inspections, so it is charged $30,000 of the quality inspection cost.
- A$20,000
- B$30,000Correct
- C$24,000
- D$15,000
Explanation
Total inspections = 150 + 250 + 100 = 500. Rate = $60,000 / 500 = $120 per inspection. Product B: 250 x $120 = $30,000. Product A would get $18,000 and C $12,000, which total $60,000 with B.
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