Swagg Jewelry Corporation Manufactures Custom Jewelry

question 39

Essay

Swagg Jewelry Corporation manufactures custom jewelry. In the past, Swagg has been using a traditional overhead allocation system based solely on direct labor-hours. Sensing that this system was distorting costs and selling prices, Swagg has decided to switch to an activity-based costing system using three activity cost pools. Information on these activity cost pools are as follows: Job #309 incurred $900 of direct material, 30 hours of direct labor at $40 per hour, 80 machine hours, and 5 inspections.
Required:
a. What is the cost of the job under the activity-based costing system?
b. Relative to the activity-based costing system, would Job #309 have been overcosted or undercosted under the traditional system and by how much?

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Definitions:

Oedipus Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.

Psychosexual Stage

In Freudian psychology, sequential developmental stages in childhood during which personality formation occurs, focusing on how children manage erotic and sexual impulses.

Physical Maturation

A process of growth and development in which a person's body becomes capable of reproduction, synonymous with puberty.

Electra Conflict

A psychoanalytic theory describing a girl’s psychosexual competition with her mother for possession of her father.