part b

Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity-based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows: Cost Pool Total $122,400 171,600 Activity Pools Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests 17,000 $324,000 Expected activity for each product follows: Decoder P Decoder o Total Number of Units 20,400 47,600 68,000 Number of Programming Hours 1,900 1,400 3,300 Number of Inspections 304 96 400 Number of Tests 1,400 1,100 2,500 Assume that before shifting to activity-based costing, Snowden Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow: Decoder P Decoder o Total Direct Labor Hours 7,200 16,800 24,000 Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC