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Stuart Electronics produces video games in three market categories: commercial, home, and miniature. Stuart has traditionally allocated overhead costs to the three products using the
Stuart Electronics produces video games in three market categories: commercial, home, and miniature. Stuart has
traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor
hours. The company recently implemented an ABC system when it installed computercontrolled assembly stations
that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified
the following activity cost pools and cost drivers:
Additional data for each of the product lines follow:
Required
a Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to
each product line using direct labor hours as a companywide allocation base. Also determine the combined cost
of all three product lines.
b Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate
overhead costs. Determine the combined cost of all three product lines.
Note: For all requirements, round intermediate calculations for allocation rates to decimal places and all
other calculations to the nearest whole dollar. Round "Cost per Unit" to decimal places. Round your
answers for "Total Cost" to the nearest whole dollar amount.
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