Context-sensitive nature of activity classification Pinson Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasks; the other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period, Pinson incurred $80,000 of inspection cost. When Pinson recently established an activity-based costing system, its activities were classified into four categories. Categories and appropriate cost drivers follow. Direct Number Number Number Labor Hours of Batches of Inspectors of Square Feet High caliber 4,000 25 3 40,000 Low caliber Totals 16,000 20,000 15 40 2 5 60,000 100,000 Required Allocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c) product-level activities, or (d) facility-level activities.
Context-sensitive nature of activity classification
Pinson Company makes two types of circuit boards. One is a high-caliber board designed to accomplish the most demanding tasks; the other is a low-caliber board designed to provide limited service at an affordable price. During its most recent accounting period, Pinson incurred $80,000 of inspection cost. When Pinson recently established an activity-based costing system, its activities were classified into four categories. Categories and appropriate cost drivers follow.
| Direct | Number | Number | Number |
| Labor Hours | of Batches | of Inspectors | of Square Feet |
High caliber | 4,000 | 25 | 3 | 40,000 |
Low caliber Totals | 16,000 20,000 | 15 40 | 2 5 | 60,000 100,000 |
Required
Allocate the inspection cost between the two products assuming that it is driven by (a) unit-level activities, (b) batch-level activities, (c) product-level activities, or (d) facility-level activities.
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