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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. Because

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 PoolsCost Pool TotalCost DriverRepair and maintenance on assembly machine$104,000Number of units producedProgramming cost168,000Number of programming hoursSoftware inspections12,000Number of inspectionsProduct testing16,000Number of testsTotal overhead cost$300,000

Expected activity for each product follows:

Number of Units . Number of Programming Hours . Number of Inspections . Number of Tests

Decoder P16,000 2,000 190 1,400

Decoder Q36,000 1,500 60 1,100

Total 52,000 3,500 250 2,500

Required

  1. Compute the overhead rate for each activity pool.
  2. Determine the overhead cost allocated to each product.

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