Zachary Industries produces two electronic decoders, P and Q. Decoder P is more

Question

Zachary 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 Total $102,000 Activity Pools Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost Cost Driver Number of units produced 90,280 Number of programming hours 10,500 Number of inspections 9,800 Number of tests $212,580 Expected activity for each product follows: Number of Number of Programming Decoder P Decoder Q Total Units 17,000 34,000 51,000 Hours 2,000 1,700 3,700 Number of Inspections 193 157 350 Number of Tests 1,200 1,600 2,800 Required a. Compute the overhead rate for each activity pool b. Determine the overhead cost allocated to each product.

Explanation / Answer

1 Overhead rate Repairs and maintenance of assembly machine 2 =102000/51000 Programming cost 24.4 =90280/3700 Software inspection 30 =10500/350 Product testing 3.5 =9800/2800 2 Decoder P Decoder Q Repairs and maintenance of assembly machine 34000 68000 Programming cost 48800 41480 Software inspection 5790 4710 Product testing 4200 5600 Overhead cost allocated to each product 92790 119790

Related Questions

Navigate

• Browse (All)
• Browse Z
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.