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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
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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.
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