Rundle Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires...

 

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Rundle 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: Activity Pools Repair and maintenance on assembly machine Programming cost Software inspections Product testing Cost Pool Total $ 60,500 88,060 8,320 11,200 Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Total overhead cost Expected activity for each product follows: $ 168,080 Number of Number of Programming Number of Number of Units Hours Inspections Tests Decoder P 18,000 2,200 190 1,400 Decoder Q 37,000 1,500 130 2,100 Total 55,000 3,700 320 3,500 Required a. Compute the overhead rate for each activity pool. b. Determine the overhead cost allocated to each product. Rundle 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: Activity Pools Repair and maintenance on assembly machine Programming cost Software inspections Product testing Cost Pool Total $ 60,500 88,060 8,320 11,200 Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Total overhead cost Expected activity for each product follows: $ 168,080 Number of Number of Programming Number of Number of Units Hours Inspections Tests Decoder P 18,000 2,200 190 1,400 Decoder Q 37,000 1,500 130 2,100 Total 55,000 3,700 320 3,500 Required a. Compute the overhead rate for each activity pool. b. Determine the overhead cost allocated to each product.