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. 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:
Snowden Industries produces two electronic decoders, P and Q. Decoder

Expected activity for each product follows:

Snowden Industries produces two electronic decoders, P and Q. Decoder

Required
a. Compute the overhead rate for each activity pool.
b. Determine the overhead cost allocated to each product.

Activity Pools Cost Pool Total Cost Driver Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost $104,000 168,000 12,000 16,000 $300,000 Number of units produced Number of programming hours Number of inspections Number of tests Number of Programming Number of Inspections 190 60 250 Number of Units Number of Tests Decoder P Decoder O 16,000 36,000 52,000 2,000 1,500 3,500 1.400 1,100 2,500

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