Acme Manufacturing Company of Portland, Oregon has a Research & Development department that currently provides services to in-house manufacturing departments. Other manufacuturers have expressed interested in using Acme’s R&D department for special projects. Management has decided to conduct an activity-based costing system in order to determine charges for both outside and in-house users of the department’s services.
|R&D activities fall into four pools with the following annual costs:|
|Activity analysis determines that the appropriate cost drivers and their usage for the four activities are:|
|Activities||Cost Drivers||Total Estimated Drivers|
|Market Analysis||Hours of analysis||1500 hours|
|Product Design||Number of designs||2500 designs|
|Product Development||Number of products||90 products|
|Prototype Testing||Number of tests||500 tests|