Question

Evert Company makes two types of circuit boards. One is a high-caliber board designed to accomplish...

Evert 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, Evert incurred $540,000 of inspection cost. Evert recently established an activity-based costing system that classifies its activities into four categories. Categories and appropriate cost drivers follow:

Direct Labor Hours Number of Batches Number of Inspectors Number of Square Feet
High caliber 6,000 20 3 30,000
Low caliber 21,000 20 2 70,000
Total 27,000 40 5 100,000

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. Note that each allocation represents a separate alternative. In other words, the $540,000 of inspection cost will be allocated four times, once for each cost driver. (Do not round intermediate calculations.)

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