ABC versus traditional costing. Quantrek Corporation manufactures cellular phones and pagers Overhead costs are currently allocated using direc t labor hours.

but the controller has recommended an activity-based costing system lowing data:

a. Compute the amount of overhead allocated to each of the products under activitybased costing.

b. Compute the amount of overhead to be allocated to each product using labor hours as the allocation base. Assume 20.000 labor hours were used to assemble cellular phones and 80.000 labor hours were used to assemble pagers.

c. Should the company adopt an ABC system?

Transcribed Image Text:

Activity Level Activity Cost Driver Cost Cellular Phones Pagers Production Setup Number of Setups $100.000 15 25 Material Handling and Requisition Number of Parts 10,000 221 28 Packaging and Shipping Number of Units Shipped 50,000 60.000 80.000 Total Overhead $160.000