Exhibit 1. Direct Manufacturing Costs for One Computer
Raw (direct) material
Direct labor
Cortland 1000
Cortland 2000
$1,000
$200
$2,500
$400
Exhibit 2. Analysis of Annual Budgeted Manufacturing Overhead Costs
Activity
Cost Driver
Budgeted Activity
Budgeted Cost
Raw material handling
Received orders
200
$90,000,000
Machine adjusting
Setups
2,000
12,000,000
Packing
Batches
500
60,000,000
Raw material inspecting
Inspecting hours
200,000
10,000,000
Soldering
Soldering hours
200,000
12,000,000
Assembly
Assembly hours
100,000
12,000,000
Total $196,000,000
Exhibit 3. Annual Production Data for Cortland 1000 and Cortland 2000 Computers
Item
Measure
Cortland 1000
Cortland 2000
Budgeted production
no. of computers
20,000
5,000
Received order size*
size of order
10,000
500
Batch size
computers
5,000
100
Machine setups
per batch
5
6
Inspecting time
hours per computer
1
2
Soldering time
hours per computer
3
1
Assembly time
hours per computer
1
1
* The company received 2 orders of raw materials each year for the Cortland 1000 (i.e., 20,000 computers \( = 10,000 order size)
1. under simple costing system, calculate the selling price of 1000 and 2000. (use machine hrs as
allocation base)
2. use Activity based costing system, calculate the selling price of 1000 and 2000.