Adams Industries produces two electronic decoders, P and Q . Decoder P is more sophisticated and requires
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Adams 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 activitybased costing to allocateoverhead costs. It has identified four activity pools. Relevant information follows:
Activity Pools
Cost Pool
Repair and maintaining
Total
:
on assembly machine
Cost Driver Number of units produced
$
Programming cost Software inspections
Number of programming hours Number of inspections
Product testing
Number of tests
Total overhead acost
Expected activity for each product follows:
Number of
Programming
Number of Inspections
Number of Tests
Units
Hours
Decoder Decoder
Total
Redquired
a Compute the overhead rate for each activity pool.b Determine the overhead cost allocated to each product.
B
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
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