Computing overhead rates based on different cost drivers Obannon 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.

L.O. 2, 3 Activity Pools Cost Pool Total Cost Driver Repair and maintenance on assembly machine $200,000 Number of units produced Programming cost 420,000 Number of programming hours Software inspections 30,000 Number of inspections Product testing 40,000 Number of tests Total overhead cost $690,000 Expected activity for each product follows.

Number of Number Programming Number Number of Units Hours of Inspections of Tests Decoder P 20,000 2,000 190 1,400 Decoder Q 30,000 1,500 60 1,100 Totals 50,000 3,500 250 2,500 Required

a. Compute the overhead rate for each activity pool.

b. Determine the overhead cost allocated to each product.