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Terry Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because
Terry 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 Cost Pool Total Cost Driver Activity Pools Repair and maintenance on assembly machine Programming cost Software inspections Product testing $ 78,000 92,130 7,560 13,600 Number of units produced Number of programming hours Number of inspections Number of tests Total overhead cost $191,290 Expected activity for each product follows Number of of Units Decoder P 22,000 Decoder Q38,000 Number ProgrammingNumber Number of Inspections of Tests 1,500 1,900 Hours 1,500 2,200 180 90 Total 60,000 3,700 270 3,400
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