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2 66 Exercise 5-5A (Static) Context-sensitive nature of activity classification LO 5-2, 5- 3 nts eBook Evert Company makes two types of circuit boards. One
2 66 Exercise 5-5A (Static) Context-sensitive nature of activity classification LO 5-2, 5- 3 nts eBook Evert Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasks; the other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period, Evert incurred $540,000 of inspection cost. Evert recently established an activity-based costing system that classifies its activities into four categories. Categories and appropriate cost drivers follow: Direct Labor Number of Hint High caliber Low caliber Hours 6,000 21,000 Batches 20 Number of Inspectors 3 Number of Square Feet 30,000 20 70,000 Total 27,000 40 5 100,000 eferences Required Allocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c) product-level activities, or (d) facility-level activities. Note that each allocation represents a separate alternative. In other words, the $540,000 of inspection cost will be allocated four times, once for each cost driver. (Do not round intermediate calculations.) (a) Unit-level activities (b) Batch-level activities (c) Product-level activities (d) Facility-level activities Allocated Cost High-Caliber Boards Low-Caliber Boards
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