Terry Industries produces two electronic decoders, P and Q Decoder P is more sop

Question

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 Cost Pool TotalCost Driver Activity Pools Repair and maintenance on assembly machine $ 64,800Number of units produced 09350 Number of programming hours Software inspections Product testing 510 Number of inspections 2,710Number of tests Total overhead cost $193,370 Expected activity for each product follows. Number of Number Programming Number Number of Units Decoder P 15,000 Decoder 39,000 1,800 2,700 190 120 1,600 1,500 Total 54,000 4,500 310 3,100 Required Compute the overhead rate for each activity pool. (Round your answers to 2 decimal places.) Pools Repair and maintenance on assembly machine Programming cost Product testing Determine the overhead cost allocated to each product. (Rouncd intermediate calculations to 2 decimal places.) Decoder P DecoderO

Explanation / Answer

a.

Working:

b.

Working:

Allocation Rate Activity Pools Decoder P Decoder Q Repair and maintenance on assembly machine 0.28 0.72 Programming cost 0.40 0.60 Software inspections 0.61 0.39 Product testing 0.52 0.48

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