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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 Cost Pool Total $104,000 168,000 12,000 16,000 $300,000 Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Expected activity for each product follows: Number of Number of Programming Number of Number of Decoder P Decoder Q Total Units 16,000 Inspections Tests 2,000 190 1,400 36,000 1,500 60 52,000 3,500 250 1,100 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: Decoder P Decoder 0 Total Diret Labor Hours 8,000 16,000 24,000 Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. h. Determine the cost ner unit for overhead when usinn direct labor hours as the allocation hace and when using ARC
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