Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows: Activity Expected Cost Activity Driver Activity Capacity Engineering $1,000,000 Engineering hours 5,000 hours Setups 900,000 Setups 200 setups Machining 2,000,000 Machine hours 25,000 machine hours Inspection 800,000 Inspection hours 2,500 inspection hours Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity: Model C Model D Units completed 300,000 200,000 Engineering hours 1,000 4,000 Setups 80 120 Machine hours 20,000 5,000 Inspection hours 1,500 1,000 Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Related questions

Question

Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers as follows:

Activity	Expected Cost	Activity Driver	Activity Capacity
Engineering	$1,000,000	Engineering hours	5,000 hours
Setups	900,000	Setups	200 setups
Machining	2,000,000	Machine hours	25,000 machine hours
Inspection	800,000	Inspection hours	2,500 inspection hours

Quasi-Tech produces two models: Model C and Model D. The following table shows how the two products consume activity:

	Model C	Model D
Units completed	300,000	200,000
Engineering hours	1,000	4,000
Setups	80	120
Machine hours	20,000	5,000
Inspection hours	1,500	1,000

Determine the engineering costs assigned to Model C using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. The engineering cost assigned to Model C would be

Expert Solution