Question

Exercise 5-7A (Algo) Comparing an ABC system with a traditional costing system LO 5-1,5-3 Snowden 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 Repair and maintenance on assembly machine Programming cost Software inspections Product testing Total overhead cost Cost Pool Total $110,400 135,180 19,098 23,089 $287,500 Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Expected activity for each product follows: Number of Units 13,899 32,200 46,000 Decoder P Decoder e Total Number of Programming Hours 2,089 1,500 3,500 Number of Inspections 198 Number of Tests 1,490 1,100 2,500 Assume that before shifting to activity-based costing, Snowden Industries allocated all overhead costs based on direct labor hours. Direct labor data pertaining to the two decoders follow. Decoder P Decoder Direct Labor Hours 7,500 17,500 < Prev 3 of 6 !! Next >

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Answer 1