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Rooney Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because

Rooney 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 $ 77,000 Number of units produced
Programming cost 97,170 Number of programming hours
Software inspections 7,020 Number of inspections
Product testing 9,000 Number of tests
Total overhead cost $ 190,190

Expected activity for each product follows:

Number of Units Number of Programming Hours Number of Inspections Number of Tests
Decoder P 22,000 2,100 184 1,200
Decoder Q 33,000 2,000 86 1,300
Total 55,000 4,100 270 2,500

Required

  1. Compute the overhead rate for each activity pool.

    Activity Pools Allocation Rate
    Repair and maintenance on assembly machine
    Programming cost
    Software inspections
    Product testing
  2. Determine the overhead cost allocated to each product.

Total Allocated Cost
Decoder P
Decoder Q

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