Comparing Two Products under Traditional and Activity-Based Costing

Compare two projects under development by the same company. The following are a few aspects of each product's development process relevant to costs.

Product S Requires 3,840 hours of testing

Requires 5,250 units of computing power

Requires 20 developer hours to implement

Product T Requires 960 hours of testing

Requires 2,250 units of computing power

Requires 80 developer hours to implement

Cost Items Cost of Each Activity Testing:$30,000 Computing power:$45,000 Developer hourly cost:$11 per hour

Traditional Costing

Traditional costing would take the proportion of a direct cost, such as direct labor hours, and use it as the basis for allocating overhead costs, such as computing power and testing. In the following table, use developer hours as the basis for assigning overhead costs (computing and developer costs) to each project. If required, round your answers to the nearest dollar.

Product S

Percentage of developer hours 20%

Testing cost$________

Computing cost$____

Developer cost$____

Total cost$___

Product T

Percentage of developer hours 80%

Testing cost$________

Computing cost$____

Developer cost$____

Total cost$___