Understanding the context-sensitive nature of classifying activities Mauldin Company makes two types of cell phones. Handy is a thin, pocket-size cell phone that is easy to carry around. Action is a palm-size phone convenient to hold while the user is talking.

During its most recent accounting period, Mauldin incurred $150,000 of quality-control costs. Recently Mauldin established an activity-based costing system, which involved classifying its activities into four categories. The categories and appropriate cost drivers follow.

Mauldin uses direct labors hours to allocate unit-level activities, number of batches to allocate batch-level activities, number of engineers to allocate product-level activities, and number of square feet to allocate facility-level activities.
Required
Allocate the quality-control cost between the two products, assuming that it is driven by (a) unit level activities, (b) batch-level activities, (c) product-level activities, and (d) facility-level activities. Note that each allocation represents a separate allocation. In other words, the $300,000 of quality control costs will be allocated four times, once for each cost driver.

Transcribed Image Text:

Number of Batches Number of Engineers Direct Labor Hours Number of Square Feet 37,000 83,000 120,000 26,000 24,000 38 22 10 5 15 Handy Action Totals 60 50,000