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Perez 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
Perez 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, Perez incurred $280,000 of inspection cost. Perez recently established an activity-based costing system that classifies its activities into four categories. Categories and appropriate cost drivers follow: Direct Labor Hours 5,000 15,000 20,000 Number of Batches 25 25 Number of Inspectors 4 3 High caliber Low caliber Number of Square Feet 50,000 90,000 140,000 Total 50 7 | 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 $280,000 of inspection cost will be allocated four times, once for each cost driver. (Do not round intermediate calculations.) Allocated Cost High-Caliber Boards Low-Caliber Boards (a) Unit-level activities (b) Batch-level activities (c) Product-level activities (d) Facility-level activities
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