Business, 07.03.2020 04:16 shiyaharper
Perez 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, Perez incurred $280,000 of inspection cost. Perez 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 5,000 25 4 50,000 Low caliber 15,000 25 3 90,000 Total 20,000 50 7 140,000 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 $280,000 of inspection cost will be allocated four times, once for each cost driver.
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