Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Perez Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because
Perez 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:
Activity Pools | Cost Pool Total | Cost Driver | ||
Repair and maintenance on assembly machine | $ | 92,800 | Number of units produced | |
Programming cost | 100,000 | Number of programming hours | ||
Software inspections | 8,500 | Number of inspections | ||
Product testing | 9,240 | Number of tests | ||
Total overhead cost | $ | 210,540 | ||
Expected activity for each product follows:
Number of Units | Number of Programming Hours | Number of Inspections | Number of Tests | |||||||||
Decoder P | 21,000 | 2,100 | 181 | 1,300 | ||||||||
Decoder Q | 37,000 | 1,900 | 159 | 2,000 | ||||||||
Total | 58,000 | 4,000 | 340 | 3,300 | ||||||||
Required
-
Compute the overhead rate for each activity pool.
Activity Pools Allocation Rate Repair and maintenance on assembly machine Programming cost Software inspections Product testing -
Determine the overhead cost allocated to each product.
Total Allocated Cost Decoder P Decoder Q
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started