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. *Need help for informatio going into excel* Expected activity for each product follows.Number of Units Number of Programming Hours Number of Inspections Number of TestsDecoder P16,0002,0001901,400Decoder Q36,0001,500601,100Total52,0003,5002502,500Requireda. Compute the overhead rate for each activity pool.b. Determine the overhead cost allocated to each product. Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires moreprogramming 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 PoolsCost Pool TotalCost DriverRepair and maintenance on assembly machine$ 104,000Number of units producedProgramming cost168,000Number of programming hoursSoftware inspections12,000Number of inspectionsProduct testing16,000Number of testsTotal overhead cost$300,000

The activity overhead rate is calculated as estimated overhead cost divided by units of cost driver.

Answered: Expected activity for each product…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.

*Need help for informatio going into excel*

Expected activity for each product follows.
Number of Units Number of Programming Hours Number of Inspections Number of Tests
Decoder P
16,000
2,000
190
1,400
Decoder Q
36,000
1,500
60
1,100
Total
52,000
3,500
250
2,500
Required
a. Compute the overhead rate for each activity pool.
b. Determine the overhead cost allocated to each product.

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
Cost Pool Total
Cost Driver
Repair and maintenance on assembly machine
$ 104,000
Number of units produced
Programming cost
168,000
Number of programming hours
Software inspections
12,000
Number of inspections
Product testing
16,000
Number of tests
Total overhead cost
$300,000

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