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Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q.
Snowden 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 Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost Expected activity for each product follows: Cost Pool Total Cost Driver Number of units produced Number of programming hours Number of inspections $ 105,600 143,400 11,000 15,000 Number of tests $ 275,000 Number of Number of Programming Number of Number of Units Hours Inspections Tests Decoder P Decoder Q Total 19,800 2,000 190 1,400 46,200 66,000 1,000 3,000 60 1,100 250 2,500 Assume that before shifting to activity-based costing, Snowden Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow: Direct Labor Hours Decoder P. 6,600 Decoder Q 15,400 Total 22,000 Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. Note: Round intermediate calculations to 2 decimal places. Round your answers to the nearest whole dollar amount. Decoder P Decoder Q Allocated Cost Total $ 0 Required A Required B > Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. Complete this question by entering your answers in the tabs below. Required A Required B Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. Note: Round intermediate calculations and final answers to 2 decimal places. Cost per unit Method Decoder P Decoder Q ABC Labor hours < Required A Required B >
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