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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