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 Expected activity for each product follows: Decoder P Decoder Q Total Number of Number of Programming Hours 2,700 2,300 5,000 Decoder P Decoder Q Total Units 19,800 46,200 66,000 Direct Labor Hours Cost Pool Total $ 99,000 7,200 16,800 24,000 167,000 21,000 25,000 $312,000 Number of Inspections 266 84 350 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: Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Number of Tests 1,400 1,100 2,500
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 Expected activity for each product follows: Decoder P Decoder Q Total Number of Number of Programming Hours 2,700 2,300 5,000 Decoder P Decoder Q Total Units 19,800 46,200 66,000 Direct Labor Hours Cost Pool Total $ 99,000 7,200 16,800 24,000 167,000 21,000 25,000 $312,000 Number of Inspections 266 84 350 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: Cost Driver Number of units produced Number of programming hours Number of inspections Number of tests Number of Tests 1,400 1,100 2,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Please help me with part a and part b thanku
Transcribed Image Text: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
Expected activity for each product follows:
Decoder P
Decoder Q
Total
Number of
Number of Programming
Hours
Decoder P
Decoder Q
Total
Units
19,800
46,200
66,000
Direct Labor
Hours
2,700
2,300
5,000
7,200
16,800
24,000
Cost Pool
Total
$ 99,000
167,000
21,000
25,000
$312,000
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:
Number of
Inspections
266
84
350
Cost Driver
Number of units produced
Number of programming hours
Number of inspections
Number of tests
Number of
Tests
1,400
1,100
2,500
Transcribed Image Text:Required
a. Compute the amount of overhead cost allocated to each type of decoder when using direct labor hours as the allocation base.
b. Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC.
Complete this question by entering your answers in the tabs below.
Required A Required B
Determine the cost per unit for overhead when using direct labor hours as the allocation base and when using ABC. (Round
intermediate calculations and final answers to 2 decimal places.)
Method
ABC
Labor hours
Cost per unit
Decoder P
Decoder Q
< Required A
Required B >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education