Reference no: EM132655562
Comparing Two Products under Traditional and Activity-Based Costing Product S Compare two projects under development by the same company. The following are a few aspects of each product's development process relevant to costs.
Requires 3,840 hours of testing Requires 960 hours of testing
Requires 5,250 units of computing power Requires 2,250 units of computing power
Requires 20 developer hours to implement Requires 80 developer hours to implement
Cost Items Cost of Each Activity
Testing: $30,000
Computing power: $45,000
Developer hourly cost: $11 per hour
Traditional Costing
Traditional costing would take the proportion of a direct cost, such as direct labor hours, and use it as the basis for allocating overhead costs, such as computing power and testing. In the following table, use developer hours as the basis for assigning overhead costs (computing and developer costs) to each project. If required, round your answers to the nearest dollar.
Product S Percentage of developer hours 20%
Testing cost$ _____
Computing cost$ _____
Developer cost$______
Total cost$______
Product T Percentage of developer hours 80%
Testing cost$______
Computing cost$______
Developer cost$_______
Total cost $_______
Question 1: Using the data above for products S and T, calculate the costs using activity-based costing. Allocate the costs of testing, computing, and development based on the rates of activity consumed by each product's development process. If required in your computations, round per unit costs to the nearest cent. Round