Terry 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.

Expected activity for each product follows.

Required
a. Compute the overhead rate for each activity pool.
b. Determine the overhead cost allocated to eachproduct.

Transcribed Image Text:

Activity Pools Cost Pool Total Cost Driver Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost 52,000 84,000 6,000 8,000 $150,000 Number of units produced Number of programming hours Number of inspections Number of tests Number of Hours 2,000 3,500 Number Programming Decoder P Decoder Q 36,000 1,500 Total of Units 16,000 52,000 Number of Inspections 190 60 250 Number of Tests 1,400 1,100 2,500