Terry 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 Cost Pool Total Cost Driver Number of units produced 121,800 Number of programming Programming cost 94,240 hours Number of inspections Number of tests Software inspections Product testing 7,560 11,780 $235,380 Total overhead cost Expected activity for each product follows. Number of Number Number Programming of Units of Number Inspections of Tests Hours Decoder 21,000 2,300 182 1,300 P Decoder 1,500 37,000 98 1,800 Q Total 58,000 3,800 280 3,100 Required: a. Compute the overhead rate for each activity pool. (Round your answers to 2 decimal places.) Allocation Rate Activity Pools Decoder P Decoder Q Repair and maintenance on assembly machine Programming cost Software inspections Product testing b. Determine the overhead cost allocated to each product. (Round intermed iate calculations to 2 decimal places.) Total Allocated Cost Decoder P Decoder Q
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Terry 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 Cost Pool Total Cost Driver Number of units produced 121,800 Number of programming Programming cost 94,240 hours Number of inspections Number of tests Software inspections Product testing 7,560 11,780 $235,380 Total overhead cost Expected activity for each product follows. Number of Number Number Programming of Units of Number Inspections of Tests Hours Decoder 21,000 2,300 182 1,300 P Decoder 1,500 37,000 98 1,800 Q Total 58,000 3,800 280 3,100 Required: a. Compute the overhead rate for each activity pool. (Round your answers to 2 decimal places.) Allocation Rate Activity Pools Decoder P Decoder Q Repair and maintenance on assembly machine Programming cost Software inspections Product testing b. Determine the overhead cost allocated to each product. (Round intermed iate calculations to 2 decimal places.) Total Allocated Cost Decoder P Decoder Q
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