Activity-Based Costing at HP

• Values:
  • Total Overhead Costs: $30,000,000
  • Cost Driver Units: 600,000
  • Number of Activities: 5
  • Activity Cost Pools: Development, Testing, Marketing, Support, Sales

• Requirements:
  1. Allocate overhead costs using the ABC method.
  2. Compare the results of ABC with traditional costing.
  3. Discuss the benefits of ABC in technology development.
  4. Suggest improvements to HP’s cost allocation practices.