roebuck industries produces two electronic decoders p and q decoder p is more sophis 453642
Aug 29, 2021 | Uncategorized
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Roebuck 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 |
| Repair and maintenance on assembly machine |
$ |
50,000 |
|
Number of units produced |
| Programming cost |
|
84,000 |
|
Number of programming hours |
| Software inspections |
|
6,000 |
|
Number of inspections |
| Product testing |
|
8,000 |
|
Number of tests |
|
|
|
|
|
| Total overhead cost |
$ |
148,000 |
|
|
|
|
|
|
|
|
| Expected activity for each product follows. |
|
Number
of Units |
Number of
Programming
Hours |
Number
of Inspections |
Number
of Tests |
| Decoder P |
20,000 |
|
2,000 |
|
190 |
|
1,400 |
|
| Decoder Q |
30,000 |
|
1,500 |
|
60 |
|
1,100 |
|
|
|
|
|
|
|
|
|
|
| Total |
50,000 |
|
3,500 |
|
250 |
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Assume that before shifting to activity based costing, Roebuck Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow.
|
|
Direct Labor Hours |
| Decoder P |
15,000 |
|
| Decoder Q |
22,000 |
|
|
|
|
| Total |
37,000 |
|
|
|
|
|
| a. |
Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base. (Do not round your intermediate calculations. Omit the “$” sign in your response.)
|
| Product |
Allocated Cost |
| Decoder P |
$ |
| Decoder Q |
|
|
|
| Total |
$ |
|
|
|
| b. |
Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. (Round your intermediate calculations and final answers to 2 decimal places. Omit the “$” sign in your response.)
|
|
Cost per unit |
|
|
| Method |
Decoder P |
Decoder Q |
| ABC |
$ |
$ |
| Labor hours |
|
|
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