Nampa Technology, an Idaho manufacturer of printed circuit boards, has always estimated the support cost of its circuit boards with a 100 percent “markup” over its material costs. An activity analysis suggests that support costs are driven primarily by the number of manual operations performed on each board, estimated at $4 per manual operation. Compute the estimated support costs of two typical circuit boards below using the traditional markup and the activity analysis results:

Why are the cost estimates different?

Transcribed Image Text:

Board Z15 Board Q52 Material cost Manual operations $40.00 $60.00 15