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Rundle 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
Rundle 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, Rundle incurred $290,000 of inspection cost. Rundle recently established an activity-based costing system that classifies its activities into four categories. Categories and appropriate cost drivers follow: Direct Number of Labor Hours Batches 6,000 29 Number of Inspectors 3 Number of Square Feet 50,000 High caliber Low caliber Total 29 95,000 23,000 29,000 58 145,000 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 $290,000 of inspection cost will be allocated four times, once for each cost driver. (Do not round intermediate calculations.) Low-Caliber Boards Allocated Cost High-Caliber Boards (a) Unit-level activities (b) Batch-level activities (c) Product-level activities (d) Facility-level activities
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