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Madison Dairy is an ice cream maker with 4 products: vanilla, chocolate, strawberry and mocha-almond, preparing to use Time-Driven Activity-based costing to assign costs of Quality Inspection Department (QID) to these 4 products. The datum related to September of 2020 are as follow:

1. QID has 5 employees for quality inspection working 20 days a month and 8 hours a day, but not all that time was available for productive work. Breaks, lunch, training, and meetings consume about 2 hour per day of employees time, leaving 6 hours per day available for work.

2. QID employees are paid a fixed salary per month of $30,000 and plus fringe benefits of 50%.

3. Additional information are shown below:

	Number of Inspection during the Month	Hours per Inspection	Total of Other Costs	Output (Box)
Vanilla	70	2	$126,000	1,400
Chocolate	54	1	$180,000	1,800
Strawberry	62	3	$68,200	620
Mocha-almond	55	4	$33,000	275

Required:

1. Calculate QID Capacity Cost Rate.(7%)

2. Assign the inspection cost to 4 products respectively.(10%)

3. Calculate total costs and unit cost of 4 product respectively. (Note: Each product costs = Inspection cost + Other costs. The other costs include all the direct and indirect costs except for inspection cost) (8%)

4. What would happen to unit cost of each of 4 products if the inspection cost are assigned on the basis of number of inspections? Which one is more accurate and why?(5%)

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