Question
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 Cost Pool Total Cost Driver Number of units produced $104,500 143,500 Number of programming hours 14,000 Number of inspections 18,000 Number of tests $280,000 Expected activity for each product follows: Number of Number of Programming Units Hours Number of Inspections Number of Tests Decoder P 16,500 1,500 304 2,248 Decoder Q 38,500 1,000 96 1,760 Total 55,000 2,500 400 4,000 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 Decoder P Decoder Q Total Direct Labor Hours 6,000 14,000 20,000 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 ovelhead 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 has
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