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

 

  

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Snowden 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 Cost Pool Total Cost Driver $104,000 Repair and maintenance on assembly machine Programming cost Number of units produced Number of programming hours 168,000 Software inspections 12,000 Number of inspections Product testing 16,000 Number of tests Total overhead cost $300,000 Expected activity for each product follows: Number of Number of Programming Number of Inspections Number of Tests Hours Decoder P Units 16,000 2,000 190 Decoder Q 1,400 1,100 36,000 1,500 60 Total 52,000 3,500 250 2,500 Assume that before shifting to activity-based costing, Snowden Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow: Direct Labor Hours Decoder P 8,000 16,000 Decoder Q Total 24,000 Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. (Round intermediate calculations to 2 decimal places.) Allocated Cost Decoder P Decoder Q Total Complete this question by entering your answers in the tabs below. Required A Required B Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. (Round intermediate calculations and final answers to 2 decimal places.) Cost per unit Method Decoder Q ABC Labor hours Decoder P Snowden 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 Cost Pool Total Cost Driver $104,000 Repair and maintenance on assembly machine Programming cost Number of units produced Number of programming hours 168,000 Software inspections 12,000 Number of inspections Product testing 16,000 Number of tests Total overhead cost $300,000 Expected activity for each product follows: Number of Number of Programming Number of Inspections Number of Tests Hours Decoder P Units 16,000 2,000 190 Decoder Q 1,400 1,100 36,000 1,500 60 Total 52,000 3,500 250 2,500 Assume that before shifting to activity-based costing, Snowden Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow: Direct Labor Hours Decoder P 8,000 16,000 Decoder Q Total 24,000 Required a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. (Round intermediate calculations to 2 decimal places.) Allocated Cost Decoder P Decoder Q Total Complete this question by entering your answers in the tabs below. Required A Required B Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. (Round intermediate calculations and final answers to 2 decimal places.) Cost per unit Method Decoder Q ABC Labor hours Decoder P

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1a Working Note Answer Computation of Overhead Rate for Each Activ... View the full answer